* Brainard says U.S. supports Japan's efforts to end
* Investors await G20, BOJ meetings this week
* Aussie steadies after drop to 3-month low
By Lisa Twaronite
TOKYO, Feb 12 The yen wallowed close to recent
lows in Asian trading on Tuesday after a U.S. Treasury official
implied tolerance of a weaker Japanese currency as a side-effect
of efforts to whip deflation.
The dollar was buying 94.30 yen, slightly up from
late North American trade on Monday when it rose as high as
94.465 yen on the EBS trading platform, its highest level since
The euro was slightly lower at 126.28 yen after
it jumped 2 percent against the Japanese unit on Monday, moving
toward a 34-month high of 127.71 yen hit on Wednesday last week.
U.S. Treasury Undersecretary for International Affairs Lael
Brainard said the United States supports Japanese efforts to end
deflation and re-invigorate growth.
She also stressed that the Group of 20 nations needs to
deliver on the commitment to move to market-determined exchange
rates and refrain from competitive devaluation.
Her remarks came ahead of a meeting of euro zone finance
ministers on Monday and the G20 meeting later in the week, which
are likely to focus on whether some countries are deliberately
trying to weaken their currencies.
Against a backdrop of rising rhetoric about a currency war,
the Group of Seven nations are considering issuing a statement
this week reaffirming their commitment to "market determined"
exchange rates, two G20 officials said on Monday.
France said on Monday that euro zone finance officials should
discuss the rising strength of the euro, but several ministers
played down the issue and the G7 was expected to call for
"market-determined" exchange rates.
Japanese Finance Minister Taro Aso told a news conference
after a cabinet meeting on Tuesday that Japan would tell the G20
that its monetary and economic policies are aimed at beating
The euro also benefited from comments from European Central
Bank council member Jens Weidmann, who said discussions about an
overvaluation of the euro are simply a diversion from
governments' task of sorting out their economies. He added that
a currency policy aimed at weakening the euro would lead to
Against the dollar, the euro was slightly down North
American levels, buying $1.3398, closer to its Feb. 8 low
of $1.3353 than to its 15-month peak of $1.3711 set on Feb. 1.
The Bank of Japan will hold its regular meeting on Wednesday
and Thursday, and is expected to keep monetary policy steady for
Still, markets are pricing in more easing to come as the
government of Prime Minister Shinzo Abe has kept steady pressure
on the central bank to take bold action to achieve its new 2
percent inflation target.
The Australian dollar was steady at 96.66 yen, in
sight of its four-and-a-half year peak of 97.42 set a week ago.
Against the U.S. dollar, the Aussie was slightly
higher, last buying $1.0258 after falling to a three-month low
The People's Bank of China has been a regular buyer of the
Aussie, but with China closed for most of this week for the
Lunar New Year holiday, it may be especially vulnerable to a
selloff, said Boris Schlossberg, managing director of FX
strategy at BK Asset Management
A break below $1.0250 suggests a bearish technical
development and may open the path to a test of 1.0150, he said
in a note to clients.