* 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 (Reuters) - 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 aggressively.
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 intended.
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 months.
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 Jan. 25.
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.