* Abe says BOJ should mull maximising employment as mandate
* BOJ's easing stance contrasts with no easing sign from ECB
* Japan Nov current account deficit larger than expected
* Dollar/yen up 0.4 pct, hits high of 89.35 yen
* Euro/dollar near 8 1/2-month peak after ECB
By Hideyuki Sano
TOKYO, Jan 11 The yen slid to 2 1/2-year lows on
Friday after Japanese Prime Minister Shinzo Abe said the Bank of
Japan should consider maximising employment as a policy goal on
top of its current price stability mandate.
Abe's comments, made in an interview with the Nikkei
newspaper published on Friday, put renewed pressure on the yen
as having a dual mandate, similar to the U.S. Federal Reserve's,
could make the BOJ undertake more aggressive easing.
The dollar rose to as high as 89.35 yen, its
strongest since June 2010, before giving up some of its gains to
trade at 88.90 yen, still up 0.2 percent from late U.S. levels.
Also adding pressure to the yen, data showed Japan posted a
current account deficit of 222.4 billion yen ($2.5 billion) in
November. It was the first deficit in 10 months and far larger
than economists' median forecast of an almost negligible deficit
of 3.5 billion yen ($39 million).
Ayako Sera, a market economist at Sumitomo Mitsui Trust
Bank, said the data underscored Japan's slow trade with China
after a territorial dispute sparked anti-Japan riots in
"The deficit in the current account is likely to continue in
the next couple of months given its seasonal pattern," she said.
The dollar's gain accelerated after a break of the 88.50
option barrier triggered short-covering in thin early Wellington
"Short-term players who had earlier taken profits are now
re-entering. A rise above 90 is within sight now," said a trader
at a Japanese bank.
The euro also climbed to 118.58 yen, a high last
seen in May 2011, and last stood at 117.79 yen, slightly above
late U.S. levels.
The yen has been sinking since November on speculation of
more easing from the BOJ. Traders expect the central bank to
adopt an explicit two percent inflation target at its policy
meeting on Jan. 21-22 to fall in line with the aims of the
Liberal Democrat Party-led government elected last month.
But with the yen's climb having shot to about 10 percent
against the dollar and 13.5 percent versus the euro in less than
two months, some traders have begun to worry about friction with
Abe's drive could be seen as a beggar thy neighbour policy
aimed at devaluing the currency at the expense of its trading
partners, they say.
"I can easily imagine the dollar falling a few yen quickly
if, say, (U.S. Treasury Secretary nominee Jack) Lew raises even
a slightest sign of concerns about Japan's policy," said a
trader at a Japanese trading firm.
But underlying pressure on the yen remains constant as the
BOJ's deepening bias for easing stands in stark contrast to
other major central banks.
For example, minutes of the U.S. Federal Reserve's last
policy meeting published last week and recent remarks by some
officials at the bank showed concern about the potential side
effects of its stimulus.
And on Thursday, European Central Bank President Mario
Draghi gave no indication it would cut rates in the near future,
disappointing euro bears who had thought the ECB would be
inclined to cut rates to shore up the wobbly euro zone economy.
Draghi's apparent about-face from last month's dovish stance
lifted the euro 1.6 percent on Thursday, its biggest daily gain
in five months, and it kept that gain in Asia, trading at
The single currency is not far from an 8 1/2-month peak of
$1.33085 hit last month.
The euro was also bolstered by solid demand at a sale of
mostly two-year Spanish debt, which caused Spain's benchmark
10-year bond yields to fall to a 10-month low.
The British pound, hurt by a string of weak economic data in
recent days, also rebounded sharply on Thursday after the Bank
of England left interest rates and its quantitative easing
The pound stood at $1.6155, maintaining its 0.8
percent gain on Thursday.
The Australian dollar clung near a four-month high hit on
Thursday after strong Chinese trade data. The Aussie unit
fetched $1.0586, near Thursday's high of $1.0599.