LONDON: The dollar inched lower against the yen on Friday as investors took profit on its recent surge, but the Bank of Japan's radical policy drive to beat deflation looked set to keep the 100 yen level firmly within its sights.
The greenback has gained more than 7 percent from about 92.90 yen since the BOJ pledged last week to inject about $1.4 trillion into the Japanese economy in less than two years to achieve its target of 2 percent inflation.
The dollar was on track for its largest two-week gain versus the yen since early 2009 after it hit a 4-year high of 99.95 yen on Thursday on trading platform EBS.
But the pullback saw it down 0.4 percent on the day on Friday at 99.32 yen, with traders citing options-related offers also halting further progress.
"We are seeing some profit-taking this morning. Also dollar/yen has gone too high, too fast so we are seeing some pullback," said Morten Helt, senior FX analyst at Danske Bank.
"Nevertheless we see dollar/yen trade higher and eventually hitting that magic 100 mark."
The BOJ's easing steps have prompted many analysts to revise up their forecasts for dollar/yen. Societe Generale analysts now target an eventual rise to 110, up from 103 previously.
The yen showed little reaction to comments from BOJ Governor Haruhiko Kuroda on Friday where he said the BOJ has taken all necessary steps to meet its 2 percent inflation target in two years and will try to minimise the market disruption from its massive bond buying.
The euro slipped 0.7 percent to 129.65 yen, having pulled back from a three-year high of 131.10 yen set on Thursday.
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