Yen plunges after BoJ chief says he will quit early

TOKYO: The yen plunged to its lowest level in nearly three years against the dollar in Asian trade on Wednesday after the Bank of Japan's chief said he would quit early, fuelling more easing speculation.

The Japanese unit fell to 93.83 against the dollar in Tokyo, its lowest level since May 2010, and down from 93.61 in New York. The yen was at 92.35 on the dollar in Asian trading on Tuesday.

The euro also racked up gains at 127.57 yen from 127.13 yen in New York and 124.63 yen on Tuesday in Asia.

The yen's sharp tumble followed Bank of Japan (BoJ) Governor Masaaki Shirakawa's announcement late on Tuesday that he planned to quit on March 19, about three weeks before the end of his term.

His offer to resign intensifies the search for a successor who would take aggressive monetary policies promised by the new government led by Prime Minister Shinzo Abe, analysts said.

The BoJ and Abe's administration butted heads on policy matters, with the hawkish premier having openly said he wants a more like-minded candidate as Tokyo looks to boost the world's third-largest economy.

Last month, the bank said it would adopt a two percent inflation goal demanded by the new government in a bid to beat the deflation that has haunted Japan for years.

It also unveiled an unlimited asset-purchase scheme to start next year.

But days later, Shirakawa cast doubt on the inflation target and said pressure on central banks has "risen globally more than ever".

London-based Capital Economics said in a note that Shirakawa's early departure may ease the transition to a new leadership team, but added that it "may not advance the process that much, depending on how accommodating the parliamentary opposition chooses to be".

Shirakawa said he would go early to coordinate with the ending of his two deputies' terms, rejecting speculation that government pressure forced his hand.

"This explanation is entirely plausible although Shirakawa could perhaps be forgiven for wanting to leave as soon as possible given the criticism he has received for 'not doing enough' to end deflation," Capital Economics said.

"However, no candidates have even been nominated for any of the three roles, let alone approved."

Yen "weakness has resumed with a vengeance", National Australia Bank said, while Citibank Japan chief currency strategist Osamu Takashima pegged the dollar to hit the 95.70 yen level in the next two weeks, a huge surge from the record-lows around 75 it fetched against the yen in late 2011.

The euro, meanwhile, was nearly flat on the dollar at $1.3580 from $1.3582 in US trade, following stronger-than-expected eurozone data that came ahead of a key European Central Bank policy meeting.