TOKYO: The yen weakened in Asian trade on Tuesday as markets look to a Bank of Japan (BoJ) meeting for signs of more easing in the wake of a landslide electoral win by the country's conservative opposition.
Premier-in-waiting Shinzo Abe, the hawkish head of the Liberal Democratic Party, campaigned on a vow to pressure the central bank into more aggressive policy measures to boost the world's third-largest economy.
Sunday's results, which returned the LDP to power, were cheered on equity markets and saw the yen dive to multi-month lows against the dollar and euro on Monday.
In Tuesday morning forex trade, the dollar bought 83.94 yen, up from 83.87 yen in New York on Monday, while the euro also edged higher to 110.57 yen, from 110.40 yen.
The European single currency fetched $1.3174, against $1.3161.
The BoJ starts a two-day policy meeting on Wednesday, where it will discuss the possibility of setting an inflation target, with Abe pushing for a two percent goal, Kyodo news agency reported.
Japan's economy has suffered from deflation for years with previous policies aimed at reversing the price-falling trend having little impact.
The central bank is also expected to discuss whether to further ease monetary policy to boost the stagnant economy.
The dollar may face selling pressure if the BoJ holds off taking fresh easing steps, said a senior dealer at a major Japanese trust bank.
But "the trend of yen selling is getting clearer for the mid- to long-term", he told Dow Jones Newswires.
Investors were also eyeing talks in Washington over averting the fiscal cliff, the combination of tax hikes and spending cuts set to take effect in January if divided US lawmakers fail to reach a new budget deal.
On Monday, US President Barack Obama met with Republican House Speaker John Boehner in the latest effort to reach an accord.
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