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Dollar climbs past ¥94 on BOJ news

JIJI

The dollar climbed above ¥94 in Tokyo trading Monday on news that Asian Development Bank President Haruhiko Kuroda, an advocate of bold monetary easing, is expected to be nominated to lead the Bank of Japan.

At 5 p.m., the dollar was quoted at ¥94.12-17, up from ¥93.25-27 at the same time Friday. The euro stood at $1.3221-3223, up from $1.3211-3212, and at ¥124.46-48, up from ¥123.21-23.

The dollar briefly soared above ¥94.50 in early trading, as the market took a cue from media reports over the weekend that the government will nominate Kuroda, an ex-finance minister, to succeed Masaaki Shirakawa as the central bank chief. Kuroda has expressed support for aggressive monetary easing.

Gakushuin University professor Kikuo Iwata, a vocal critic of the BOJ’s past monetary policy measures, will be nominated as one of two BOJ deputy governors, according to media reports.

“The dollar’s rise in the early morning could have been exaggerated by thin market conditions,” said Kengo Suzuki, foreign exchange strategist at Mizuho Securities Co. “Still, if Kuroda becomes the new BOJ chief, the yen is likely to weaken in the medium to long term.”

An official of a major Japanese bank noted that “it is surprising that two of the three top BOJ posts are likely to be filled by so-called ‘reflationists,’ ” who advocate aggressive monetary easing to cause mild inflation in an economy long plagued by deflation.

Meanwhile, market participants found it hard to push the dollar higher above the ¥95 line as a rapid fall of the yen would be criticized in the international community, said an analyst at a bank-affiliated brokerage house.

After the initial buying spree ran out of steam, the U.S. currency came under profit-taking and temporarily sagged below ¥94 in midmorning trading due to factors of uncertainty, such as the outcome of the general election in Italy, for which voting is due to end Monday. The dollar regained firmness above ¥94 after European players joined trading in late hours.

The dollar-yen pair was not affected significantly by the Australian dollar’s drop after the HSBC China manufacturing purchasing managers’ index for February posted the lowest level in four months.