The yen fell in Asian trade on Friday as Tokyo unveiled a huge stimulus package and kept pressure on the central bank to take more easing steps to stimulate the limp economy.
The dollar bought 89.03 yen in Tokyo afternoon trade against 88.64 yen in New York late Thursday. Earlier Friday the greenback briefly surged to 89.34 yen, its highest level since June 2010.
The euro fetched 118.07 yen, passing 118.00 yen for the first time since May 2011. The common currency was at 117.53 yen in New York Thursday afternoon.
Against the dollar the euro bought $1.3258, from $1.3261 in New York where the European common currency was lifted after European Central Bank chief Mario Draghi made upbeat remarks about the eurozone’s economic outlook.
The yen remained weak and Tokyo stocks closed up 1.40 per cent as prime minister Shinzo Abe unveiled a $226.5 billion stimulus package in a bid to kickstart the world’s third-largest economy.
‘Trading has been led by expectations for policy steps,’ said Daisuke Karakama, market economist at Mizuho Corporate Bank.
‘These expectations are materialising one by one... The government will likely to do whatever it takes until the upper house election and the decision over a consumption tax hike later in the year,’ he told Dow Jones Newswires.
Abe has also reiterated in recent interviews with Japanese media that he will press the central bank to make more efforts to pull the nation out of years of deflation, as it is set to hold a policy meeting on January 21-22.
The mass-circulation Yomiuri daily said the Bank of Japan would consider introducing an annual inflation target of two per cent, as Abe wants, and continue monetary easing until it reaches its goal.
The yen was also weighed down as government data showed the nation had fallen into a deficit on the current account, the broadest measure of the nation’s trade with the rest of the world.
Japan logged a bigger-than-expected 222.4 billion yen deficit in November as exports to Europe and China dropped, data from the finance ministry showed.