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Yen Declines On Expectations Of Aggressive Easing By Bank Of Japan

The Japanese yen lost ground against its key counterparts in Asian morning deals on Tuesday amid expectations of more stimulus measures under the new Bank of Japan leadership.

In his confirmation hearing to a committee of the upper house of parliament, Kikuo Iwata, one nominees for Bank of Japan deputy governor, stressed the importance of bolder monetary easing. He said that central bank can attain its 2% inflation target only by buying long-term government debt.

Haruhiko Kuroda, the Japanese government's nominee for the next central bank governor, yesterday vowed to use all options to reach the 2 percent inflation target and also stressed the need for a faster expansion in stimulus.

At a confirmation hearing to a committee of the Upper House of the Parliament, Kuroda, said that the Bank of Japan's efforts so far to exit deflation have not been sufficient and that he will take every measure possible to achieve the 2 percent inflation target

Members of the Bank of Japan's monetary policy board felt that further easing measures may be necessary and discussed their options, minutes from the board's meeting on February 13 and 14 revealed today.

Among those options were lowering interest rates on excess reserves, as well as more risk assets, the minutes showed.

The yen fell to a 3-1/2-year low of 96.72 against the greenback, depreciating 0.45 percent from yesterday's close of 96.29. If the yen slides further, it may break 97.5 level.

Against the pound and the Swiss franc, the yen declined to a 4-day low of 144.17 and a fresh 3-week low of 102.03, respectively. If the yen slides further, it may break 145.00 against the pound and 103.00 against the franc. At Monday's close, the yen was worth 143.63 against the pound and 101.69 against the franc.

The Japanese yen reached 126.06 against the euro, its weakest level since February 13. The yen may find next downside target level at 127.5. The pair ended deals at 125.62 yesterday.

The yen touched 99.41 against the aussie, the level unseen since August 2008. The yen thus lost 0.40 percent from yesterday's New York session close of 99.01. On the downside, the yen may break 101.00 level.

The yen slipped to 4-day lows of 79.89 against the kiwi and 94.23 against the loonie from Monday's closing value of 79.76 and 93.87, respectively. The yen may seek support around 81.00 against the kiwi and 95.5 against the loonie.

At 1:00 am ET, Japan consumer confidence index for February is due.

German wholesale price index and final inflation data for February, U.K. industrial production and trade data for January are scheduled for release in the European session.

by RTT Staff Writer

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