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Dollar edges down ahead of BoJ policy meeting

TOKYO - The dollar edged down against the yen in Asian trade on Friday as markets waited for the outcome of a monetary policy meeting at the Bank of Japan, dealers said.

The dollar slipped to 89.43 yen in Tokyo morning trade from 89.96 in New York late Thursday.

The euro was steady at 1.4335 dollars, against 1.4338. The European currency was at 129.29 yen compared with 129.00.

Profit-taking hit the greenback but analysts said its overall tone remained positive.

“The dollar is in a win-win situation at present,” said Calyon analyst Mitul Kotecha.

“Good economic data in the US helps to advance expectations of US monetary tightening, lending the dollar support, regardless of the positive impact on risk appetite. Similarly, bad economic news is also supporting the dollar as it leads to higher risk aversion,” Kotecha added.

Tokyo traders had their eyes turned to the Bank of Japan’s policy meeting decision due later Friday, waiting to see whether the central bank will step up purchases of government bonds to revive the deflation-hit economy.

The BoJ in early December said it would pump more than 100 billion dollars in cheap, short-term loans into the market in a bid to raise liquidity and lower interest rates.

The central bank is expected to keep the key interest rate at a rock-bottom 0.1 percent at Friday’s meeting.

With activity winding down ahead of the year-end holiday season, the currency market may be affected by position-adjustments and exporter selling more than trade based on economic fundamentals, dealers said.

“Even though the dollar’s strength is likely to continue, it will be weighed down at the 90 yen levels by sales ordered by Japanese exporters,” Barclays Capital analysts wrote in a note.

The dollar got a tailwind from the Federal Reserve’s comments earlier this week suggesting that the US central bank may raise interest rates sooner than previously expected.