Yen reaches weakest since 2010 on BOJ easing expectations

The yen touched the weakest level versus the dollar since June 2010 on bets Japanese Prime Minister Shinzo Abe will select a central-bank chief who will expand monetary easing, accelerating the currency’s decline.

Japan’s currency slid beyond 120 per euro for the first time since May 2011 after Abe, who’s called for a higher inflation target, said he wanted someone “who can push through bold monetary policy” as the next Bank of Japan governor. The BOJ meets next week. The dollar fell to a 10-month low versus the euro after Federal Reserve Bank of Chicago President Charles Evans said the U.S. should keep monetary policy accommodative.

“There continue to be expectations that there will be more easing from the BOJ,” Charles St-Arnaud, a foreign-exchange strategist at Nomura Holdings Inc. in New York, said in a telephone interview. “There are a lot of expectations there will be a new inflation target, and it’s contributed to a run on the yen.”

The yen depreciated 0.1 percent to 89.25 per dollar at 9:14 a.m. New York time after reaching 89.67, the weakest level since June 25, 2010. Japan’s currency slipped 0.1 percent to 119.18 per euro and reached 120.13, a level not seen since May 4, 2011. The dollar was little changed at $1.3353 per euro after reaching $1.3404, the weakest since Feb. 29.

Japanese financial markets were shut today for a holiday.

Kiwi, Pound

The New Zealand dollar, nicknamed the kiwi, climbed against all of its 16 most-traded counterparts after a report today showed an advance in retail spending. The currency advanced 0.7 percent to 84.23 U.S. cents and gained 0.8 percent to 75.17 yen.

Sterling weakened for a seventh day versus the euro as pressure intensified for the government to renegotiate the terms of its European Union membership. The pound declined 0.6 percent to 83.21 pence per euro and fell 0.6 percent to $1.6043.

The Swiss franc dropped as European leaders said the worst is probably over for the region’s sovereign-debt crisis. Investors used the currency as a haven as the financial turmoil dented European asset values. The franc slid 0.6 percent to 1.2258 per euro and touched 1.2277, its lowest level since December 2011.

The kiwi increased 2.3 percent over the past year compared to nine developed-nation peers monitored by the Bloomberg Correlation-Weighted Indexes. The pound added 1 percent, while the dollar fell 4.1 percent and the yen lost 19 percent in the biggest decline.

The next BOJ governor must be a “bold policy leader,” Abe said yesterday on public broadcaster NHK’s “Sunday Debate” program. BOJ Governor Masaaki Shirakawa is due to speak tomorrow at a meeting of branch managers. He plans to step down in April after two of his deputies exit in March.

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