* Yen weakest major currency this year
* Euro helped by banks repatriating funds, Draghi comments
* Yen hits 5-year low versus dollar
By Laurence Fletcher
LONDON, Dec 30 The yen fell against a stronger
euro and hit a five-year low against the dollar on Monday,
driven by expectations the Bank of Japan will announce more
money-printing and euro zone banks draw back foreign-held assets
before the end of the year.
The euro was 0.2 percent up against the yen at
144.74 yen, having hit a five-year high of 145.675 yen on
The single currency has been boosted by euro zone lenders
repatriating funds ahead of the year-end to shore up their
capital bases before an ECB Asset Quality Review. It was also
supported by comments from the European Central Bank chief over
the weekend that there is no urgent need to cut interest rates.
The dollar rose to 105.415 yen, its highest level
since October 2008, in Asian trading and last stood at 105.34
yen, up 0.2 percent.
The yen has been the weakest major currency this year,
weighed down by the BOJ's pledge to keep interest rates low.
This encourages carry trades, in which investors borrow the
yen and buy higher-yielding assets, while many commentators
believe Japan's central bank will increase it stimulus programme
The dollar has gained 21 percent against the Japanese
currency while the euro, the strongest major currency in 2013,
has risen 26 percent.
"The (Japanese) central bank is still intending to increase
its balance sheet at a pace that's not going to be reduced as in
the UK or the U.S." said Hans Redeker, head of global currency
strategy at Morgan Stanley.
He also cited Japanese investors buying euro zone government
bonds as weighing on the yen and helping the euro.
The euro was up marginally against the dollar at
$1.3742, having shot up as high as $1.3894 in thin year-end
trade on Friday, its highest since October 2011. It has risen
more than 4 percent against the dollar in 2013 and is set for a
second straight year of gains.
ECB President Mario Draghi's said in an interview with
German news magazine Spiegel published on Saturday that he sees
no urgent need to cut the euro zone's main interest rate further
and no signs of deflation.
"The market is still keen to believe those type of words,"
said Morgan Stanley's Redeker.
"It's a very thin marketplace, so it only needs a bit of
liquidity to take the market into some type of significant price
Rises in U.S. bond yields since the Federal Reserve's
decision earlier in December to begin to trim purchases, have
also underpinned the dollar against the lower-yielding yen. The
10-year U.S. notes yield hit a two-year high above 3.0 percent.
"For the moment, the market wants to carry on the latest
trend as far as it can," said Masafumi Yamamoto, chief
strategist at Praevidentia Strategy in Tokyo.
The Australian dollar was 0.2 percent down against the U.S.
dollar at $0.8851, near three-year lows. It has shed
almost 15 percent this year.