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 afternoon trade, the dollar bought 84.02 yen, up from 83.87 yen in New York on Monday, while the euro also edged higher to 110.68 yen, from 110.40 yen.
The European single currency fetched $1.3172, against $1.3161.
Japan's central bank chief Masaaki Shirakawa went to see the incoming prime minister at his party headquarters Tuesday, with an official denying the banker was summoned by the monetary easing hardliner.
The brief meeting came ahead of the start of a two-day BoJ policy meeting from 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, National Australia Bank said.
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.
The dollar was mostly lower against other Asia-Pacific currencies.
It slipped to 1,071.74 South Korean won from 1,072.32 won on Monday, to 41.02 Philippine pesos from 41.04 pesos, to 30.57 Thai baht from 30.58 baht and Sg$1.2196 from Sg$1.2201.
The greenback also edged down to 9,672 Indonesian rupiah from 9,697 rupiah and to Tw$29.04 from Tw$29.05 while rising to 54.75 Indian rupees from 54.55 rupees.
The Australian dollar edged up to US$1.0541 from US$1.0539 while China's yuan was flat at 13.46 yen.
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