TOKYO- The dollar edged up against the yen Friday after the Bank of Japan (BoJ) stood pat on its stimulus programme, partially reversing a sell-off in New York fuelled by fears over the growing crisis in Iraq.
In afternoon Tokyo trading, the dollar strengthened to 101.87 yen from 101.68 yen in New York although the US unit was still down from levels above 102 yen in Asia on Thursday.
The euro strengthened to 138.04 yen from 137.80 yen in US trade while is was also at $1.3555 against $1.3553.
BoJ policymakers unanimously agreed to hold off any further measures after a two-day meeting, despite fears that a sales tax rise in April would dent the country’s nascent recovery.
Many analysts, however, expect the BoJ to usher in further easing later this year to counter a downturn from the levy hike, a move that would tend to weaken the yen.
“A case could be made that further stimulus beyond the originally planned two years (of the current easing package) has become unnecessary,” Capital Economics said.
“We think this is premature. For a start, price pressure has moderated, and inflation will likely fall short of the target by the end of the year… We stick to our long-held view that an extension (of the easing package) will be revealed at the late-October meeting,” it added.
The dollar sank in US trade as dealers nervously watch Iraq, where jihadists are heading towards Baghdad after capturing several towns in the north. President Barack Obama has said he is exploring all options to save the country’s security forces from collapse while US companies have evacuated hundreds from a major air base.
With the militants closing in on the capital, forces from Iraq’s autonomous Kurdish region took control of Kirkuk, an ethnically divided northern city they have sought to rule for decades against the objections of successive governments in Baghdad.