FOREX-Yen firmer at month-end, clings to gains as BOJ stands pat

Wed Apr 30, 2014 1:26am EDT

Related Topics

* BOJ stands pat as expected, yen shows limited reaction

* Yen firmer on the day, some traders cite possible month-end flows

* Euro holds steady ahead of euro zone inflation data

* Fed policy also eyed (Updates prices, adds comments)

By Masayuki Kitano

SINGAPORE, April 30 (Reuters) - The yen clung to its gains against the dollar on Wednesday after the Bank of Japan held off from fresh stimulus as expected, with some traders saying month-end flows may have contributed to the yen's firm tone.

The dollar was down 0.2 percent at 102.42 yen, having shown little reaction after the BOJ voted unanimously to maintain its pledge of increasing base money, its key policy gauge, at an annual pace of 60 trillion to 70 trillion yen ($587-685 billion).

Market expectations for any imminent monetary easing by the BOJ had waned recently, as BOJ Governor Haruhiko Kuroda has steadfastly stuck to a view that inflation in Japan is firmly on a path to reach the BOJ's target of 2.0 percent.

The near-term focus is the BOJ's semi-annual report due at 0600 GMT and a news conference by Kuroda at 0630 GMT.

The dollar had already weakened against the yen ahead of the BOJ decision, with some traders attributing the decline to possible month-end flows from Japanese players.

One trader said earlier that Japanese banks seemed to be persistent sellers of the dollar versus the yen, while another trader said there was talk of dollar-selling interest by Japanese exporters at the month-end.

The yen also held firm versus the euro, which sagged 0.2 percent to 141.41 yen, down from a three-week high of 142.47 yen set on Tuesday.

The common currency struggled to gain traction against the dollar ahead of a reading on euro zone inflation due later on Wednesday.

The euro eased 0.1 percent to $1.3806, having retreated from Tuesday's intraday high of $1.3880.

The euro had come under pressure on Tuesday after a key measure of German inflation came in at a lower-than-expected 1.1 percent on the year, raising the risk that the euro area reading will also undershoot expectations.

"A low April print would increase the likelihood of policy action next week," analysts at BNP Paribas wrote in a note to clients. The European Central Bank (ECB) holds its policy review on May 8 although it is not expected to inject any fresh stimulus at this stage.

The U.S. Federal Reserve's policy review is also coming up later on Wednesday. The Fed is set to continue paring stimulus with a $10 billion taper to its monthly bond buying widely expected.

As for when the Fed will actually start lifting interest rates, traders said anyone seeking clarity on that front will be left sorely disappointed. (Additional reporting by Ian Chua in Sydney; Editing by Jacqueline Wong)

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