* Dollar and euro trade near February highs versus yen
* Euro awaits current account data, German ZEW
* Aussie slips from 1-month high as PBOC drains liquidity
By Anirban Nag
LONDON, Feb 18 The yen fell to its lowest in
nearly three weeks against the dollar and the euro on Tuesday,
after the Bank of Japan held policy steady, as expected, and
extended a special lending programme to support the economy.
In an attempt to get Japanese banks to lend more, the BOJ
decided to extend three special loan facilities by one year. It
also raised the maximum amount of the loans, and said financial
institutions would be able to borrow funds at a fixed rate of
0.1 percent over 4 years instead of 1-3 years at present.
The measures were seen as an inclination to ease monetary
policy and sent Japanese stocks higher and the yen lower. BOJ
chief Haruhiko Kuroda said the economy was moving in line with
the central bank's assessment, suggesting no further easing
steps were likely in the near term.
The Nikkei stock average ended 3.1 percent higher,
pushing the yen lower. The dollar was up 0.6 percent at 102.55
yen, having hit a February high of 102.745, while the
euro was up 0.7 percent at 140.64.
"The extension of the loan schemes both in size and lifespan
are seen as particularly beneficial to the financial sector,
helping the Nikkei to end up and reverse the recent dollar/yen
bear trend," said Tom Levinson, currency strategist at ING. He
added that 102.85/95 yen resistance should hold for now.
Nevertheless, some market participants used the BOJ's
announcement as an excuse to buy back dollars after the U.S.
currency's recent decline. The latest easing by the BOJ comes
nearly a year after it unleashed a massive bond-buying programme
aimed at getting the economy out of years of deflation.
"The announcement should be very helpful for banks' profits,
so it's very natural that the Nikkei should rise, led by banks,
and that's why the dollar/yen soared," said Masashi Murata,
senior currency strategist at Brown Brothers Harriman in Tokyo.
EURO AWAITS ZEW
The euro inched up against the dollar to $1.3715, not
far from a high of $1.3723 touched on Monday, its highest since
Jan. 24. It is likely to draw some support from an expected
increase in the current account surplus for the euro zone, with
figures due at 0900 GMT.
Analysts said year-end repatriation by banks to meet balance
sheet requirements probably helped the euro zone boost the
current account surplus.
Also due is the German ZEW survey at 1000 GMT. While the
economic sentiment survey is likely to show little change, the
current conditions are forecast to show improvement in February.
That could help the euro, though resistance is expected at
$1.3740 - the high hit on Jan. 24.
The Australian dollar slipped from a one-month high
of $0.9079 to trade flat on the day at $0.9030. It eased after
the Chinese central bank drained funds from the market and
signalled a continuation of its tight liquidity policy aimed at
managing a slowdown in the world's second-largest economy.
The Australian dollar is often used as a more liquid proxy
to investments in China.
Earlier, in minutes released on Tuesday of the Reserve Bank
of Australia's Feb. 4 meeting, when the RBA surprised some by
dropping its bias to ease further, the central bank noted that a
lower exchange rate would support growth.