Yen falls to 2-1/2 yr low versus dollar, weak against euro

LONDON Tue Feb 5, 2013 6:34am EST

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LONDON Feb 5 (Reuters) - The yen fell to a 2-1/2 year low against the dollar and dropped sharply versus the euro on Tuesday as some Japanese companies stepped up hedging against further weakness amid mounting expectations of more aggressive easing by the Bank of Japan.

The dollar rose to 93.30 yen on trading platform EBS, and was up 1 percent on the day. It was the highest since mid-2010. Traders cited option barriers at 93.50 yen with more barriers reported at 94 yen.

The euro also jumped more than 1 percent against the yen to 126.55 yen with Middle East investors cited as steady buyers of the single currency.

Earlier, Bank of Japan Governor Masaaki Shirakawa said he would step down on March 19, three weeks earlier than the official end of his five-year term. He is due to address a press conference later in the day.

Shirakawa is likely to replaced with a chief who is more amenable to Prime Minister Shinzo Abe's drive to ease policy aggressively to get Japan out of deflation.

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