Yen falls on BoJ bond buys, while shares, oil recover

Mon Apr 8, 2013 7:51am EDT
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By Richard Hubbard

LONDON (Reuters) - The yen tumbled against the euro and the dollar on Monday as the Bank of Japan embarked on its massive stimulus drive, while the lingering impact of weak U.S. jobs data limited gains in oil and equity markets.

The euro climbed to a three-year peak of 128.44 yen, while the dollar gained 1.5 percent to sweep past 99 yen after the BoJ conducted its first bond purchases since announcing the new monetary easing steps last week.

"The speed with which we've come through from 95 to 99 (yen) is absolutely astonishing. How much further we go beyond that, who knows?" said Simon Derrick, chief currency strategist at BNY Mellon Corp.

Since new BoJ Governor Haruhiko Kuroda promised on Thursday to inject about $1.4 trillion into the economy in less than two years, the yen has fallen more than 6 percent against both the dollar and the euro, while Japanese stocks have soared.

Japan's Nikkei stock average .N225 jumped as much as 3.1 percent on Monday to its highest level since August 2008.

"The BoJ's bazooka has sparked the buying of Japanese stocks, especially domestic sectors like real estate," said Yasuo Sakuma, a portfolio manager at Bayview Asset Management.

The prospect that Japanese investors will move out of their domestic debt market due to the heavy central bank buying has boosted the attractiveness other higher-yielding debt, giving Spanish and Italian government bonds a boost.

But Portuguese bonds bucked the trend after a constitutional court on Friday rejected four out of nine austerity measures in the government's latest budget, undermining its efforts to meet the terms of a bailout deal.   Continued...

Pedestrians holding umbrellas stand in front of a stock index board showing various stock prices outside a brokerage in Tokyo April 3, 2013. REUTERS/Yuya Shino