* Kiwi falls after RBNZ comments on overvalued currency
* RBNZ also says to impose home loan lending limit from Oct
* Dollar slips vs yen as Tokyo shares slide
* Near-term focus on Fed minutes due Wednesday
By Masayuki Kitano
SINGAPORE, Aug 20 The yen edged higher on
Tuesday as Tokyo shares retreated, while the kiwi fell after New
Zealand's central bank announced home lending restrictions and
said the local dollar was overvalued.
The U.S. dollar fell 0.3 percent versus the yen to about
97.29 yen, coming under pressure as Japan's benchmark
Nikkei share average extended losses in the afternoon to 2.6
The yen has had an inverse correlation to moves in Tokyo
equities in recent months, and currency traders have been
keeping an eye on Japanese shares for directional hints on the
The big mover on the day, however, was the New Zealand
dollar, which fell 1 percent to $0.7986.
The move followed home lending restrictions announced by New
Zealand's central bank governor, Graeme Wheeler, to help cool
off an overheated market without having to raise interest rates.
"Broadly speaking, what the currency has responded to is the
fact that these measures are likely to mean the RBNZ can keep
policy unchanged for longer," said Hamish Pepper, currency
strategist for Barclays in Singapore.
Markets also reacted to a change in rhetoric, with the RBNZ
describing the kiwi as overvalued, rather than high as it had in
the recent past. Wheeler also said that while a rate rise might
be needed next year, it wasn't needed now.
Another underperformer was the Australian dollar, which fell
0.7 percent to $0.9061.
The Aussie extended its losses after minutes of the Reserve
Bank of Australia's last policy meeting was seen as dovish.
Although the U.S. dollar gained ground against the New
Zealand and Australian dollars, the greenback slipped slightly
versus the euro, which rose 0.1 percent to $1.3350.
The euro eased 0.2 percent versus the yen to about 129.91
yen, down from a two-week high of 131.05 yen set on
Monday on trading platform EBS.
Recent weakness in U.S. and Japanese equities, due partly to
market expectations that the Fed could start scaling back its
monetary stimulus as early as next month, have helped support
the yen, a traditional safe haven currency that tends to attract
demand in times of market stress.
Satoshi Okagawa, senior global markets analyst for Sumitomo
Mitsui Banking Corporation in Singapore, said recent turmoil in
emerging markets such as India, Brazil and Indonesia has also
helped spur demand for the yen.
"The yen tends to attract buying when tensions in the market
increase," he said.
Okagawa said demand for yen was also offsetting the
dollar-positive impact from a recent rise in U.S. Treasury
yields and capping the dollar's moves versus the Japanese
Investors are now looking ahead to minutes of the Federal
Reserve's July meeting due on Wednesday, awaiting fresh clues on
whether the Fed will taper its bond-buying programme in