Yen Rallies After BoJ Delays Asset Buys

Japan’s currency advanced against most of its major counterparts after the BoJ (Bank of Japan) said, it will buy about 13 trillion yen ($146 billion) in assets per month from January 2014 and set a 2% inflation target.

The Bank of Japan doubled its inflation target to 2% and made an open-ended commitment to buy assets from next year, surprising markets that had expected another incremental increase in its $1.1trillion asset-buying and lending programmed.

But central bankers were divided on the new price target with two in the nine-member board voting against setting it at 2%, underscoring the dilemma the BOJ faces as it struggles to beat deflation with its depleted policy arsenal.

Overall, the size of the program has not been raised as hoped, said Greg Gibbs a Singapore based senior currency strategist at Royal bank of Scotland group plc. That is risking disappointment and causing a downward correction in dollar-yen. The BoJ statement disappoints on the pace of purchases in 2013, which has been maintained.

The yen gained 0.4% to 89.22 per dollar at 7:05 a.m.London, after earlier weakening as much as 0.6%.It touched 90.25 yesterday, the lowest since June23, 2010.Japan’s currency was little changed at 119.29 per euro from 119.30 yesterday. The euro gained 0.4% to $1.3367.

The announcement of a 2% inflation target and the open-ended asset purchases met the market’s expectations, said Yunosuke ikeda, the head of foreign exchange strategy at Nomura securities international in Tokyo.
In the U.S. sales of existing homed probably climbed 1.2% to a 5.1 million annual rate last month, the strongest since November 2009, according to the median estimate of economists polled by Bloomberg before the national association of realtors published the figures today. Another report this week may say new-home sales picked up to a 385,000 annual pace, the best showing since april 2010.