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Yen gains despite BoJ nominee's vow to beat deflation

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(Globalpost/GlobalPost)

The yen strengthened in morning Asian trade Monday after comments on beating deflation from the government's nominee to lead the Bank of Japan (BoJ) offered "no big surprises", dealers said.

Longtime BoJ critic Haruhiko Kuroda, an experienced finance veteran, vowed in a speech to parliament that the central bank would reverse years of falling prices, and hit out at previous BoJ management for failing to fix the problem.

The 68-year-old, who was nominated last week, is widely expected to be confirmed by parliament as Japan's top central banker in the coming weeks.

The yen initially slipped after his pledge to do "everything possible" to conquer deflation, signalling the likelihood of a fresh drive for more spending and aggressive monetary easing, which tends to weigh on the unit.

But markets were underwhelmed by his call for action, with easing speculation largely priced in earlier.

"We've been expecting a lot from Kuroda... and what he said was well within expectations but offered no big surprises," a senior dealer at a major bank in Tokyo told Dow Jones Newswires.

The unit has been weakening since late last year as new Prime Minister Shinzo Abe swept to power pledging to boost the economy. A weaker yen helps the country's exporters by making their products more competitive abroad.

In late morning Tokyo trade, the dollar weakened to 93.33 yen from 93.59 yen in New York Friday, while the euro fetched 121.47 yen from 121.92 yen.

Against the dollar, the European single currency was also weaker at $1.3013 from $1.3027, ahead of a eurozone finance ministers meeting later in the day that was likely to see debate on the troubled bloc's bailout plan.

Political gridlock in Italy following inconclusive parliamentary elections, stirring fears of fresh eurozone instability, was also in focus.

The greenback won a measure of support from improved economic data last week, including an advance in the University of Michigan consumer confidence index and gains in a manufacturing index for February.

Such improvement, and the aggressive level of the Federal Reserve's bond-buying stimulus, have led market participants to largely dismiss the $85 billion in government spending cuts that began on Friday.

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http://www.globalpost.com/dispatch/news/afp/130303/yen-gains-despite-boj-nominees-vow-beat-deflation