Yen tumbles in Asia as new Japan PM takes office

TOKYO: The yen tumbled to a 20-month low in Asian trading Wednesday on expectations that incoming Japanese premier Shinzo Abe would push for aggressive monetary easing to boost the nation's limp economy.

The greenback bought 85.25 yen in Tokyo afternoon trade after topping 85.00 yen for the first time since April 2011.

The US unit briefly surged to 85.35 yen, well above a postwar low of 75.32 yen hit late last year as markets turned to the yen as a safe-haven from turmoil in debt-hit Europe and a slowing global economy.

The yen's weakness also stemmed from minutes of the Bank of Japan's November policy meeting, released Wednesday, which hinted at further easing measures, dealers said. Easing tends to weigh on a national currency.

The euro, meanwhile, was also stronger against the Japanese currency at 112.39 yen from 111.77 yen on Tuesday while it was flat at $1.3181.

The sagging yen gave Tokyo's stock market a boost as it helps Japanese exporters by making their products more competitive overseas and raises the value of firms' repatriated foreign income.

The Japanese currency has been on the decline after Abe, whose Liberal Democratic Party won a landslide national election last week, steps up pressure on the central bank to take bold easing steps.

The dollar is likely to trade in a 84.50-85.30 range, with holiday-season trading expected to be relatively subdued, said Osao Iizuka, head of forex trading at Sumitomo Mitsui Trust Bank.

"The bottom line is that the dollar will likely rise further next year amid expectations that the Fed will exit loose monetary policy earlier than the BoJ,' he told Dow Jones Newswires.

Abe is to be named prime minister later Wednesday, after he swept to power on a hawkish platform of getting tough on diplomacy while fixing the economy with active fiscal spending and monetary easing.

On Sunday, he threatened to change a law guaranteeing the central bank's independence if it did not agree to set a two-percent inflation target, in a bid to drag Japan out of the deflation that has haunted its economy for years.