Yen gains after Japan minister's comments on BoJ

TOKYO: The yen gained in Asia on Tuesday after Japan's finance minister said the Bank of Japan may be divided on whether to set a two percent inflation target, a key demand of the country's new government.

"It will a big step forward for the Bank of Japan and an issue that could divide the policy board, but it's very important that it adopt a two percent inflation target and we hope that it does," Taro Aso told a press briefing.

The yen initially declined in early forex trade before reversing course after Aso's comments, as markets await the conclusion of a two-day BoJ policy meeting that is widely expected to usher in another round of monetary easing.

The dollar fetched 89.45 yen in Tokyo trade, against 89.50 yen in Europe on Monday. US markets were closed for a public holiday.

The euro also slipped to 119.10 yen from 119.20 yen while the single currency bought $1.3309 against $1.3320.

Japan's currency has been in a steep decline as markets bet the BoJ will inflate its 101 trillion yen asset-buying programme after Tuesday's meeting, which would be the first time in nearly a decade the bank has expanded monetary policy in two consecutive meetings.

An expansion of the programme, the bank's main policy tool with rates near zero, would also be its fourth major move since September after its US and European counterparts announced similar measures.

But an expected 10 trillion yen expansion and an agreement to set a new inflation target had largely been priced into the yen's recent drop, analysts said.