BLBG: Yen Declines Against Euro on Speculation BOJ to Keep Rates Low
By Anna Rascouet and Yasuhiko Seki
Dec. 18 (Bloomberg) -- The yen fell against the euro and the dollar after the Bank of Japan said it won’t tolerate consumer price declines, spurring speculation the central bank will keep the target lending rate at almost zero.
The Swiss franc appreciated beyond 1.50 per euro for the first time since March as the Swiss National Bank refrained from selling the currency to weaken it. The franc also strengthened on reduced demand for higher-yielding assets as a border guard said Iranian forces occupied an Iraqi oil well yesterday. The border guard’s comments couldn’t be immediately verified.
“The Bank of Japan said that it will maintain an accommodating monetary policy,” said David Deddouche, currency strategist at Societe Generale SA in Paris. “The yen is suffering.”
The yen declined 0.5 percent to 129.64 per euro at 8:07 a.m. in New York, from 129 yesterday. Japan’s currency slid 0.5 percent to 90.42 per dollar, from 89.96. The euro dropped 0.5 percent to 1.4953 Swiss francs, from 1.5020. The euro was little changed at $1.4337, compared with $1.4338.
Iranian forces entered Iraqi territory at dawn yesterday and occupied well number 4 in the East Maysan field in the al- Fakah region, 450 kilometers (280 miles) south of Baghdad, Border Guard General Zaser Nazmi said.
“They positioned tanks around it and dug trenches,” Nazmi said by phone from Basra. “They are still there, they raised the flag.”
East Maysan in southern Iraq is an old oil field that’s no longer in production, according to Nazmi. Iraq is the third- largest oil producer in the Mideast after Saudi Arabia and Iran.
Japan’s bonds rose as the BOJ’s statement today on prices signaled the central bank is unlikely to raise rates until inflation returns to the world’s second-largest economy.
BOJ Governor Masaaki Shirakawa and his colleagues refrained from announcing more policy actions, choosing instead to watch the effect of a 10 trillion yen ($111 billion) lending program adopted two weeks ago after the government urged them to do more to fight deflation. The bank kept the target lending rate at 0.1 percent, as forecast by all 19 economists in a Bloomberg survey.
To contact the reporters on this story: Anna Rascouet in London at arascouet@bloomberg.net; Yasuhiko Seki in Tokyo at yseki5@bloomberg.net
