Dollar holds firm ahead of BoJ announcement

TOKYO: The dollar held firm against the yen in Asian trade on Tuesday as the market awaited policy announcements by the Bank of Japan (BoJ) amid high hopes for easing measures.

The dollar was at 79.88 yen in Tokyo morning trade against 79.80 yen in New York late Monday.

The euro bought $1.2915 and 103.22 yen, up from $1.2900 and 102.95 yen in US trade.

The Bank of Japan, under siege from politicians clamouring for urgent action on the slowing economy, was expected Tuesday to usher in fresh easing measures after its policy meeting.

The bank's current main policy tool is an 80 trillion yen ($1.0 trillion) asset-purchase programme. Last month, it unveiled plans to expand the fund by 10 trillion yen following similar moves by its European and US counterparts.

"Market consensus for today's BoJ meeting (outcome) is an increase of asset purchases by 10 trillion yen," said Citibank Japan chief strategist Osamu Takashima.

"The yen won't weaken with an additional 10 trillion yen of easing," he told Dow Jones Newswires.

National Australia Bank said: "It is going to take something on a grander scale than 10 trillion yen to have any FX impact."

"We certainly doubt that we will hear anything about foreign bond buying today as a new initiative aimed at softening the yen.

"Risk, as per previous meetings, is that any knee-jerk yen weakness on a headline announcements of new easing measures, will struggle to survive the day," the bank said in a note.

As for euro-dollar trading, HiFX Senior Trader Stuart Ive said it was likely to remain mostly rangebound in the Asian session due to a lack of data.

Expectations of more stimulus from the Bank of Japan could make the pair a little choppy, he said.

The euro has spent the last five days in a general downward trend, he noted.

"We are still waiting to hear from events in Greece" on the bailout, he said. (AFP)