The yen weakened in Asia on Friday after Japan nominated a new central bank chief known to favour aggressive easing, while the dollar was mixed after weak US growth data and on fears over a budget impasse. The greenback fetched 92.63 yen in late morning Tokyo trade against 92.58 yen in New York on Thursday, while the euro also gained on the Japanese currency at 121.14 yen from 120.95 yen.
The euro was stronger on the dollar at $1.3075 from $1.3062, although the 17-nation unit has been under pressure on fears of fresh eurozone instability after inconclusive Italian elections. On Thursday, Tokyo nominated Asian Development Bank head Haruhiko Kuroda to lead the Bank of Japan, a widely expected move that had been pushing the yen down on expectations of more easing measures.
Kuroda is likely to further Prime Minister Shinzo Abe's effort to stir up growth with more easy-money stimulus and big spending, after Kuroda's predecessor resisted what he saw as excessive monetary easing. Abe's Liberal Democratic Party swept national elections in December, pledging to revive the world's third-largest economy which has suffered slow growth and deflation for years.
Japanese industrial production data for January, published before Kuroda's nomination, was likely to renew the focus on growth despite manufacturers' optimistic projections of better times ahead, said Capital Economics. The data showed factory output rose 1.0 percent from the previous month, weaker than a market estimate of a 1.5 percent expansion and lower than a revised 2.4 percent on-month increase in December.
"The latest data will do little to ease pressure on the new Bank of Japan Governor to provide more monetary stimulus," the London-based firm said. The dollar was under pressure following a less-than-expected upward revision to US fourth-quarter economic growth, with the world's largest economy expanding by 0.1 percent in the last quarter of 2012.
Markets are nervous over the expected onset of steep US government spending cuts Friday, renewing concerns over the wider impact on the global economy. About $85 billion in US spending cuts, known as sequestration, would be phased in over seven months. The sequestration also includes $109 billion in cuts over the following eight years.
The drastic moves were mandated after Democrats and Republicans failed to reach an agreement on budget deficit reduction.
From Times of Oman