Yen gains on potential Japan govt move for more flexible inflation target

The yen climbed on Monday on news that the Japanese government could soon revise a joint statement with the Bank of Japan (BOJ) over the latter’s inflation target, potentially paving the way for a tweak in the BOJ’s ultra-loose monetary policy.

The yen was last 0.4% stronger at 136.19 per dollar, after jumping more than 0.5% to a high of 135.78 earlier in the session.

The Japanese government will consider revising next year a joint statement it signed with the BOJ in 2013 that commits the central bank to meeting a 2% inflation target as soon as possible, sources told Reuters.

The revision, if made, would be done after a new BOJ governor is appointed in April, a move that may heighten the chance of a tweak to incumbent Governor Haruhiko Kuroda’s ultra-loose monetary policy. That policy stance and the resulting interest rate differentials with the rest of the world have caused the yen to plunge more than 15% this year.

Elsewhere, the dollar edged lower on Monday, with sterling last 0.28% higher at $1.21735, after falling 1% last week as investors bet that the Bank of England (BoE) might be getting close to the end of its rate-hike cycle.

The euro gained 0.19% to $1.0604. The Aussie rose 0.24% to $0.6702, while the kiwi fell 0.11% to $0.6374.

The U.S. dollar index slipped 0.19% to 104.61.