SINGAPORE (Reuters) – The dollar touched a four-month low against the yen on Wednesday, pressured by simmering concerns that the U.S. currency’s yield advantage will start to erode as major central banks head toward unwinding their massive stimulus.
The yen has gained a lift in recent weeks, after the Bank of Japan trimmed its buying of long-dated government bonds in market operations earlier this month, sparking speculation of an eventual exit from its large stimulus.
Analysts said such speculation continued to support the yen, even after BOJ Governor Haruhiko Kuroda on Tuesday stressed the importance of patiently continuing with powerful monetary easing.
“The dilemma here for the Bank of Japan is how do they temper investor expectations?” said Stephen Innes, head of trading in Asia-Pacific for Oanda in Singapore.
“This is the issue that’s on the table right now beyond the broader negative downtrend in the dollar,” Innes said.
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