* Yen hits lowest in 4 years vs dollar, 3 years vs euro
* BOJ begins buying longer-dated bonds
* Further yen falls expected
* Euro shrugs off Portugal worry as Spain, Italy yields fall
By Jessica Mortimer
LONDON, April 8 The yen slid to its lowest in
nearly four years against the dollar and in three against the
euro on Monday after the Bank of Japan began buying government
bonds as part of its aggressive stimulus policy.
The Japanese currency was poised for more falls as a setback
for the dollar after weak U.S. jobs data on Friday proved brief
and emboldened investors to resume selling the yen. This left
the dollar in sight of the 100 yen mark.
The dollar gained 1.5 percent on the day to hit 99.03
yen on the EBS trading platform, breaking above a reported
options barrier at 99 yen to hit its highest since May 2009.
Traders said it may run into strong selling before 100 yen due
to other barriers but they were not expected to hold for long.
"The fleeting impact of the weak U.S. payrolls data shows a
strong appetite to sell the yen and buy dollars. It has
reinforced confidence that the yen weakening trend is intact,"
said Lee Hardman, currency economist at BTMU.
He said the dollar looked well on target to surpass 100 yen.
However, it was unclear whether the yen would weaken at the same
pace, with the dollar having gained more than 14 percent already
this year, and its falls could be tempered by more evidence of a
slowing U.S. economy.
The BOJ conducted its first bond-buying operations on
Monday, saying it would buy 1 trillion yen of government bonds
with maturities between five and 10 years, and 200 billion yen
of bonds with maturities exceeding 10 years.
The euro also jumped, by 1.4 percent on the day to
hit its highest since January 2010 at 128.755 yen. It shrugged
off concerns about Portugal's ability to keep its bailout
programme on track after its constitutional court rejected some
of its austerity measures.
These worries were offset by sharp falls in the borrowing
costs of Spain and Italy due to demand for higher yielding euro
zone bonds from Asia after the Bank of Japan unveiled plans last
week for surprisingly aggressive monetary easing.
The euro was up 0.1 percent at $1.3007, hovering near
a two-week high of $1.3040 set on Friday after the
weaker-than-expected jobs growth data.
YEN TO FALL FURTHER
New BOJ Governor Haruhiko Kuroda said last week the central
bank would inject about $1.4 trillion into the economy in less
than two years, a gamble that sent bond yields plummeting as
prices rose on expectations of massive BOJ debt
Since then, the yen has fallen more than 6 percent against
both the dollar and euro.
"We expect further weakness ahead, given the bank's clear
commitment to achieve its 2 percent (inflation) target,"
analysts at Barclays Capital said, adding they see the dollar
rising to 103 yen in three months.
Analysts expect the flood of new money will be partly used
by Japanese investors to buy higher-yielding assets abroad,
putting downward pressure on the yen.
JPMorgan analysts wrote in a client report that they had
re-initiated a basket of yen shorts and were recommending the
Australian dollar and Brazilian real as carry trades against the
yen after the BOJ announced its aggressive stimulus plan.
The higher-yielding Australian dollar rallied to 102.85 yen
, its highest since July 2008, before the collapse of