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Yen gains on BoJ nominee reports

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(Globalpost/GlobalPost)

The yen strengthened in Asia on Wednesday as forex markets reacted to reports that Japan's main opposition party objects to one of Tokyo's nominees to lead the central bank.

In morning Tokyo trade, the dollar fetched 95.87 yen, from 96.05 yen in New York Tuesday afternoon, while the euro also weakened slightly on the Japanese currency at 124.99 yen, compared with 125.19 yen in US trading.

The Japanese currency's recent downward trend has been driven by speculation of more easing measures from the new leadership team at the Bank of Japan, who are expected to be confirmed by parliament by the end of this week.

However, Japan's main opposition party reportedly objects to the nomination of Kikuo Iwata to serve as one of two deputy BoJ governors, throwing the focus on smaller opposition parties' view of the candidate.

The fierce BoJ critic backs aggressive monetary easing, which tends to push down the value of the yen, and giving the government more control over bank policy, a touchy subject for the independent BoJ.

A vote against Iwata could dent Prime Minister Shinzo Abe's plans for a central bank team that supports his policy prescriptions to fix the nation's limp economy.

Finance veteran Haruhiko Kuroda, who is Tokyo's choice to head the central bank, has said under his stewardship the BoJ would move to meet a two-percent inflation target that policymakers adopted in January, aimed at reversing years of deflation that crimped private spending and business investment.

"There is a strong likelihood that Mr. Iwata will be approved by a narrow margin in the upper house (of parliament)," said Junya Tanase, chief forex strategist at JPMorgan in Tokyo.

"But if he were to be voted down, the dollar may fall below 95.00," Tanase told Dow Jones Newswires.

The European single currency bought $1.3033, nearly flat from $1.3035 ahead of an Italian bond auction later in the day and eurozone factory output data.

Euro weakness followed a mixed bag of news with Spain's borrowing costs dropping in a debt sale, a sign of improving market confidence, as British factory output in January slumped by 1.5 percent from the previous month.

Forex marets were eyeing US retail sales data after better-than-expected US jobs figures last week had boosted the greenback.

"The focus is on US retail sales data," a currency manager at a major Japanese bank told Dow Jones Newswires.

"If the reading comes in much stronger-than-expected... we may see the dollar testing its recent high of 96.71 yen."

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http://www.globalpost.com/dispatch/news/afp/130313/yen-gains-boj-nominee-reports-0