FOREX-Yen hits 2-1/2-year low as Japan PM heaps pressure on BOJ
* Abe says BOJ must set 2 pct medium-term inflation goal
* Dollar/yen hits highest since June 2010, 90 yen in sight
* Euro stays firm, hits strongest since April 2012 vs dollar
SINGAPORE, Jan 14 (Reuters) - The yen hit a 2-1/2-year low versus the dollar on Monday after Japanese Prime Minister Shinzo Abe stressed the need for forceful monetary stimulus and urged the Bank of Japan to set a medium-term inflation target.
In comments that came ahead of the BOJ's policy meeting on Jan. 21-22, Abe said on Sunday that the BOJ must set a 2 percent inflation target and make it a medium-term goal rather than a long-term objective.
Abe also said on Japanese public broadcaster NHK that he will meet with monetary policy experts on Tuesday to seek views on who would be suitable as next BOJ governor.
Abe's government has the power to nominate a successor to BOJ Governor Masaaki Shirakawa when his term expires in April, although the nomination needs approval by both houses of parliament.
Traders said the new Japanese prime minister's latest call for aggressive monetary easing pressured the yen and gave a boost to the dollar, which climbed to 89.67 yen on trading platform EBS, the greenback's strongest level versus the Japanese currency since June 2010.
"The confirmation that there's going to be a push for a new (BOJ) governor, that new governor is going to have a mandate of 2 percent inflation, that plus the fiscal stimulus is a major negative for the yen," said Callum Henderson, global head of FX research for Standard Chartered Bank in Singapore.
"Good news for Japanese assets, certainly in terms of the stock market, but not necessarily good news for the currency," he added.
Japan last week approved a $117 bln stimulus package, the biggest spending boost since the financial crisis, to try and support the economy.
After trimming some gains, the dollar last changed hands at 89.48 yen, up 0.3 percent from late U.S. trade on Friday.
Market players said the greenback could see more gains against the yen in the near term.
"Think 90.00 will be the psychological target level," said a trader for a Japanese bank in Singapore, referring to the outlook for the dollar against the yen.
The Japanese currency also fell against the euro, which rose to as high as 119.86 yen, the single currency's highest level versus the yen since May 2011.
Against the dollar, the euro rose to its strongest level since April 2012 at $1.3370. The euro last fetched $1.3361 , up 0.1 percent on the day.
The single currency has rallied after European Central Bank President Mario Draghi, in a news conference last Thursday, gave no indication that the ECB would cut interest rates in the near future.
Draghi's comments had disappointed euro bears who thought that the ECB would be inclined to cut interest rates in coming months to shore up the wobbly euro zone economy.
- Tweet this
- Share this
- Digg this
- Pro-independence Scots narrow gap to victory ahead of vote - poll
- UK's fate in the balance as poll shows record support for Scottish independence
- Child abuse revelations divide "most shameful town in Britain"
- Kremlin adviser says military strategy to reflect Ukraine crisis, NATO expansion - RIA
- Russian forces strengthening positions in Ukraine - Kiev military