Yen up as BoJ leaves policy unchanged, but better Greek situation may curtail demand

The Japanese yen strengthened slightly after the Bank of Japan (BoJ) left rates and monetary stimulus unchanged at the policy review on Wednesday, even as optimism that Greece may ask for a loan extension later today, 18 February reduced the safe haven demand for the Japanese currency.

The Greek optimism had dragged the yen lower across the board on Tuesday and Wednesday's gains only partly reversed the losses. The market is now waiting for BoJ governor Haruhiko Kuroda who is scheduled to address the press at 6.30am GMT.

USD/JPY slipped to 118.88 from 119.26 and EUR/JPY dropped to 135.66 from 136.17. The yen was down 1.3% against the euro and 0.7% against the dollar on Tuesday.

GBP/JPY slipped to 182.6 from 183.16, after the yen strengthened 0.6% against the pound on Tuesday.

The Japanese currency had slumped to a month's low against the New Zealand dollar with a 1.3% fall on Tuesday but is off 0.35% from the low after the BoJ decision. The NZD/JPY slipped to 89.66 after trading as high as 90.11 in the previous day.

In addition to maintaining the key policy of increasing base money at an annual pace of about 80tn yen, the BoJ raised its assessment of exports and production.

The central bank was also concerned that lower oil prices could complicate its efforts to beat prolonged deflation.

Analysts, however, are of a view that Japan will be forced to further expand its stimulus as early as October.