* Yen hits lowest in 4 years vs dollar, 3 years vs euro
* BOJ begins buying longer-dated bonds
* Euro shrugs off Portugal worry as Spain, Italy yields fall
By Jessica Mortimer
LONDON, April 8 The yen slid to a near four-year
low against the dollar and three-year trough against the euro on
Monday as the Bank of Japan began buying government bonds as
part of its aggressive stimulus policy.
The dollar looked set for further gains, and a potential
test of the 100 yen mark, as a setback from weak U.S. jobs data
on Friday proved short-lived.
The U.S. currency hit 99.03 yen on trading platform
EBS, breaking above a reported options barrier at 99 yen to hit
its highest since May 2009. It was last up 1.1 percent on the
day at 98.67 yen.
Traders said it may run into selling before 100 yen due to
other barriers but these were not expected to hold for long.
"The fleeting impact of the weak U.S. payrolls data shows a
strong appetite to sell the yen and buy dollars. It has
reinforced confidence that the yen weakening trend is intact,"
said Lee Hardman, currency economist at BTMU, who said the
dollar looked well on target to surpass 100 yen.
However, it was unclear whether the yen would maintain this
pace of weakening, with the dollar having gained more than 14
percent already this year, and its falls could be tempered by
further evidence of a slowing U.S. economy.
New governor Haruhiko Kuroda said last week the BOJ would
inject about $1.4 trillion into the economy in less than two
years, sending bond yields plummeting as prices rose on
expectations of massive debt purchases by the central
Since then, the yen has fallen more than 6 percent against
both the dollar and euro.
The BOJ conducted its first bond-buying operations on
Monday, saying it would buy 1 trillion yen of government bonds
with maturities between five and 10 years, and 200 billion yen
of bonds with maturities exceeding 10 years.
Analysts expect the flood of new money will be partly used
by Japanese investors to buy higher-yielding assets abroad,
putting further downward pressure on the yen.
JPMorgan analysts wrote in a client report that they had
re-initiated a basket of yen shorts and were recommending the
Australian dollar and Brazilian real as carry trades against the
yen after the BOJ announced its stimulus plan.
The higher-yielding Australian dollar hit 102.85 yen
, its highest since July 2008, before the collapse of
EURO/DOLLAR EDGES HIGHER
The euro climbed 1.4 percent on the day to hit its
highest since January 2010 at 128.755 yen. It shrugged off
concerns about Portugal's ability to keep its bailout programme
on track after its constitutional court rejected some of its
These worries were offset by sharp falls in the borrowing
costs of Spain and Italy due to demand for higher yielding euro
zone bonds from Asia after the BOJ plan.
The euro was up 0.2 percent at $1.3025, hovering near
a two-week high of $1.3040 set on Friday after the
weaker-than-expected U.S. jobs growth data.
Analysts said that although the euro would be overshadowed
for now by moves in the yen, the outlook for the single currency
was clouded by concerns about economic slowdown in the euro zone
and speculation the European Central Bank could ease policy.
"I am bearish on the euro. The economic situation has
deteriorated and the ECB will be under a lot of pressure to
become more adventurous," said Beat Siegenthaler, currency
strategist at UBS, who forecast the euro would edge lower to
$1.28 in three months' time.