Yen still pressured ahead of BOJ


The yen broke out last week, and first crossed the 128 mark to a three-year high on Monday, but its run is likely to continue

By staff and wire reports

TOKYO, Japan -- The yen remained under pressure on Wednesday, as the Bank of Japan got ready to wrap up its two-day policy meeting.

The Japanese currency was still trading at more than 128 to the U.S. dollar, a level it first broke through on Monday.

It reached as high as 128.45, a three-year peak, on Tuesday, and raced near that point again Wednesday. That was after a report from Jiji news agency that Standard & Poor's was likely to cut Japan's national creditworthiness rating again.

With Japan's debt rating already in a tie with Italy as the lowest major industrial nation, another cut would place a 20 percent risk premium on its bonds.

Another corporate failure

The yen then settled back to 128.14 at noon local time in Tokyo.

But the central BOJ was expected to take steps to inject more liquidity - a greater supply of cash -- into Japan's economy. That would further weaken the yen.

BOJ Governor Masaru Hayami has resisted the most unconventional courses of action. Some Japan watchers have advocated the country buying foreign bonds such as U.S. Treasuries. Others think the central bank should buy up bonds of Japanese companies.

Hayami has said both moves are too risky - the latter because more Japanese companies are likely to collapse. Supermarket chain Kotobukiya became the 14th public company to go under in Japan this year, filing for protection from creditors in Kumamoto District Court.

A weakening yen helps Japan's exporters, which normally lead any recovery.

Given Japan's labored economic condition, experts say a yen run to 140 is within reason. Some currency watchers see the yen rising to as much as 170 to the dollar by the end of next year.