Yen gains as some BoJ policymakers fret about QE costs

LONDON: The yen rose on Tuesday after Bank of Japan minutes showed the hurdle to further quantitative easing was high and as the dollar struggled to make much headway before a second reading of US growth data.

Minutes of the last BOJ meeting showed board members expressing concern that expanding the central bank's quantitative easing could increase the risk that it will be seen as financing the government deficit.

Separately in a speech, Governor Haruhiko Kuroda said that while recent yen falls are positive for exporters, it hurts households as well as small firms and non-manufacturers through increases in import costs.

Traders trimmed bearish yen positions and Japanese exporters were cited as selling dollars. The dollar last traded 0.3 percent lower at 117.96 yen, while the euro was down 0.4 percent at 146.44 yen.

"We saw inflows from investors and exporters after a holiday in Tokyo yesterday which has driven dollar/yen lower," said Yujiro Goto, currency strategist at Nomura. "The BoJ minutes also showed that some members were sceptical about quantitative easing."

The yen has been under heavy pressure, hitting a seven-year low of 118.98 last week, since the BoJ late last month surprised many by expanding its massive stimulus programme. But the speed of yen depreciation has prompted Japanese officials to voice concern. Japan's finance minister on Friday described the fall as "too rapid", which caused it to bounce briefly.

"The central bank minutes showed that there was some concern expressed about the weak yen and that seems to have taken dollar/yen off its stride," said Shinichiro Kadota, chief Japan FX strategist at Barclays in Tokyo.

Meanwhile, the second release of third-quarter US gross domestic product data is expected to show a downward revision after big upside surprise of 3.5 percent reported in the initial release. US consumer confidence is also due.

The euro was slightly lower on the day, giving up some gains made yesterday, with German growth data doing little to boost sentiment. It was down 0.1 percent at $1.2427, off the near two-year low of $1.2358 struck earlier this month.