* BOJ's policy decision on Tuesday leaves some wanting more
* Yen's recent downtrend still seen intact
* Aussie falters as tame inflation offers room for rate cut
By Masayuki Kitano and Ian Chua
SINGAPORE/SYDNEY, Jan 23 The yen held firm on
Wednesday, after surging the previous day as investors cut
bearish bets on the currency as the monetary easing announced a
day earlier by the Bank of Japan's fell short of some
The BOJ, under intense political pressure to lift Japan out
of recession, said it would double its inflation target and
switch to an open-ended commitment to buying assets next year.
While the move to end years of economic stagnation was the
bank's boldest action yet, it had been widely leaked to the
media and fell short of lofty market expectations for an
immediate substantial stimulus boost.
"Raising the inflation target was significant but the
increase in easing doesn't match the enormity of the challenge,"
said Gareth Berry, G10 FX strategist for UBS in Singapore.
Under the BOJ's new open-ended pledge, the size of its asset
buying scheme is set to increase in 2014 at a pace that will be
about three times slower than the increase planned in 2013 under
its existing asset buying programme, Berry said.
The dollar dipped 0.1 percent to 88.65 yen. The
greenback struggled to regain ground after sliding 1.1 percent
on Tuesday, its biggest one-day fall versus the yen since May.
The greenback, which hit a 2-1/2 year high of 90.25 yen on
Monday, is still up about 12 percent compared to a trough hit in
"Short-term we will probably hang around these levels for a
while given the absence of upside triggers for dollar/yen," said
Berry at UBS, adding that it might be a week at the earliest
before the dollar manages to rise back to 90 yen.
The euro slipped 0.2 percent to 118.01 yen, down
from a 20-month peak of 120.73 yen reached on Friday.
Traders said the rebound in the yen could offer better
levels to re-establish short positions in the currency, based on
expectations that the BOJ will remain under pressure to inject
more stimulus into the economy, particularly if, as expected, a
more dovish governor takes over the helm in April.
"The initial flurry of disappointment reflects the fact that
so much anticipation surrounded the announcement, and the fact
that in the very short term, this policy move changes little,"
said Kit Juckes, strategist at Societe Generale.
"Japan, like Oliver Twist, has been fed on a diet of thin
gruel for a long time. However, I continue to believe that this
move is consistent with the shift in attitude and in the
direction of policy, which will deliver a higher USD/JPY level
over the coming year, and an overshoot above 100 in due course."
The Australian dollar fell 0.3 percent to $1.0536
after a surprisingly benign inflation reading was seen as adding
modestly to the chance of an interest rate cut by Australia's
central bank next month.
The euro slipped 0.1 percent to $1.3315.