* Yen gains sharply, but rebound may be short-lived
* Aso's comments, doubts over radical BoJ chief helps yen
* Draghi's comments continue to weigh on euro
NEW YORK, Feb 8 The yen jumped on Friday after
Japan's finance minister said the currency's recent drop had
gone too far, too fast and doubts crept in about whether the
next governor of the Bank of Japan will ease policy
The yen, which fell to its low against the euro since April
2010 and its lowest against the dollar since May 2010 on
Wednesday, got a boost from Finance Minister Taro Aso's comments
that the yen's slide from 78 to 90 per dollar was steeper than
It was also helped by a Reuters report that Japanese Prime
Minister Shinzo Abe faces opposition from within his own cabinet
and financial bureaucrats to appoint a new BoJ governor who will
pursue aggressive easing policies.
Comments from European Central Bank chief Mario Draghi on
Thursday, who said the exchange rate is important for growth and
price stability, were perceived by investors as a sign the bank
is concerned with the single currency's recent advance and
continued to weigh on the single currency.
"Central bank and government officials from around the world
have given FX markets the gift of volatility this year," said
Win Thin, senior currency strategist at Brown Brothers Harriman
in New York. "Yesterday, it was ECB President Draghi's second
press conference in a row that caught markets by surprise.
Today, it was Japan Finance Minister Aso's turn, as he
apparently told reporters that the recent pace of yen weakness
has been too fast."
The euro fell as low as 123.40 yen, before paring
losses to last trade down 1.6 percent on the day at 123.48 yen.
The dollar also slid against the yen to 92.15 yen,
and was last trading at 92.38 yen, down 1.4 percent.
Earlier this month, BoJ governor Masaaki Shirakawa said he
will step down on March 19, weeks ahead of schedule, allowing
Abe to appoint a chief who is more amenable to making drastic
policy changes to get Japan out of deflation.
Expectations that the BoJ will aggressively ease monetary
policy in coming months have driven the yen lower in recent
Some strategists said gains were likely to be temporary
after Japanese balance of payments data added to worries about
the economy. Japan posted a current account deficit for the
second month running December.
The euro fell 0.2 percent against the dollar to $1.3370
, with the session trough of $1.3359, the lowest since
Draghi said economic activity in the euro area should
recover gradually in 2013 but added there are more negative
risks than positive, and said the exchange rate was important
for growth and stability.
Investors interpreted the remarks as setting the scene for a
possible future interest rate cut by the ECB, in the event that
the euro zone economy slows further.
At the moment the ECB is still withdrawing some of its
unconventional policy easing at a time when both the Federal
Reserve and the BoJ are expanding their balance sheets.