USD/JPY Drops Below 118 after BOJ Retains Stimulus Plan

The yen strengthened versus the dollar as the Bank of Japan kept asset purchases steady, while Chinese stocks climbed a second day, leading a gauge of Asian shares higher. Gold advanced to a five-month high before the European Central Bank decides policy.

The yen strengthened 0.9 percent to 117.70 versus the greenback by 1:02 p.m. in Tokyo, after weakening 1.1 percent yesterday. The Bloomberg Dollar Spot Index slipped 0.3 percent as the euro rose from near an 11-year low. The Hang Seng China Enterprises Index added 1.7 percent, helping the MSCI Asia Pacific Index to a 0.4 percent advance. Gold climbed as high as $1,298.04 an ounce. Oil in New York fetched $46.98 a barrel after falling 4.7 percent yesterday.

Plunging oil prices forced the BOJ to reduce its inflation forecast, highlighting the challenge that Governor Haruhiko Kuroda faces in reaching a 2 percent price goal after almost two years of record easing. Europe’s benchmark stock index reached its highest finish since January 2008 yesterday on speculation European Central Bank President Mario Draghi will broaden asset purchases. Speculation increased after the Swiss National Bank dropped a euro cap on the franc last week.


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