Yen weakens against euro on BOJ stimulus bets; pound strengthens

The yen weakened against the euro and the dollar as investors await the release of minutes of the Bank of Japan’s Oct. 4-5 meeting amid speculation the central bank will ease monetary policy further.

The Japanese currency fell for a third day versus the euro after Panasonic Corp. forecast the second-biggest loss in company history, fanning speculation the nation’s trade deficit will worsen. The pound climbed to the highest level in two weeks versus the dollar a report showed U.K. house prices rebounded in October and Britain’s biggest business lobby raised its economic forecasts for this year and next.

“The expectation is still in the market that because of the building political pressure the BOJ will have to move towards a more aggressive monetary policy stance,” said Lee Hardman, a currency strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London. “As we move into 2013 our bigger picture story is that we expect this yen-weakening trend to extend further.”

The yen dropped 0.4 percent to 103.74 per euro as of 7:58 a.m. New York time after losing 0.4 percent in the past two days. The Japanese currency fell 0.3 percent to 80.03 per dollar. The euro was little changed at $1.2963.

BOJ Easing

The BOJ increased its asset-purchase program on Oct. 30 by 11 trillion yen to 66 trillion yen to bolster growth through lower borrowing costs. In the previous meeting earlier that month, the central bank avoided adding to stimulus.

Panasonic, Japan’s second-biggest TV maker, scrapped its profit forecast yesterday, saying the net loss may total 765 billion yen in the year ending March 31. Nintendo Co., the world’s largest maker of video-game machines, cut its full-year net income projection last week by 70 percent, citing a stronger yen.

“Expectations of additional monetary easing by the BOJ still remain in the markets,” said Shinji Kunibe, chief portfolio manager for fixed-income investment in Tokyo at Nissay Asset Management Corp., which oversees the equivalent of $65 billion. “Considering the terrible earnings in the electronics sector and the prospect of a widening trade deficit, I can’t help thinking the era of yen weakness will come sooner than we thought.”

Japan’s imports exceeded exports by 3.22 trillion yen in the six months ended Sept. 30, the biggest trade deficit for a fiscal half-year period, the Ministry of Finance said on Oct. 22. The nation posted a shortfall in September for a third- consecutive month.

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