* Dollar/yen hits lowest level in nearly 4 weeks
* Fed signals less aggressive rate rises in coming years
* RBNZ keeps rates steady, retains easing bias
(Updates prices, adds comments)
By Masayuki Kitano
SINGAPORE, Sept 22 The dollar stumbled to a near
4-week low against the yen on Thursday, after the U.S. Federal
Reserve kept monetary policy steady and projected a less
aggressive path for interest rates hikes in coming years.
While the Fed strongly signalled that it could still tighten
monetary policy by the end of the year, policy makers cut the
number of rate increases they expect this year to one from two.
They also forecast a less aggressive rise in interest rates next
year and in 2018, according to the median projection of
forecasts released with its post-meeting statement.
Against this backdrop, analysts said the dollar could fall
further against the yen in the next few months. That view
appeared to be backed by a resilient yen, underpinned by doubts
over whether the Bank of Japan's policy overhaul will be enough
to generate inflation.
The BOJ made an abrupt shift on Wednesday to targeting
yields on government bonds to achieve its elusive inflation
target after years of massive money printing failed to jolt the
economy out of decades-long stagnation.
A near-term focus is a meeting among officials from Japan's
finance ministry, Financial Services Agency and the Bank of
Japan, due to start at 0500 GMT, to discuss issues in global
The dollar touched a low of 100.10 yen at one point,
its weakest since Aug. 26. The greenback later pared some losses
and was last trading at 100.25 yen, down 0.1 percent on the day.
The BOJ's policy shift is unlikely to prevent the yen from
rising further, said Heng Koon How, senior FX investment
strategist for Credit Suisse.
"Market is not convinced that the BOJ is doing enough to
boost inflation expectations... Overall, this does not change
our view of yen strengthening off the back of Japan's strong
current account surplus," Heng said.
Jasslyn Yeo, global market strategist for JPMorgan Asset
Management in Singapore, believes the dollar will probably head
lower against the yen going into the year-end, and expects the
greenback could soon fall below its August low of 99.55 yen.
"Yesterday's new (BOJ) framework is not new easing. I think
it more represents a softening stance towards banks and other
financial institutions likely due to concerns and backlash over
profitability and financial stability," Yeo said.
A drop below that August trough would take the dollar to its
lowest levels since June 24, when the greenback fell to 99.00
yen - its lowest level since November 2013 - as markets turned
volatile after the UK voted to leave the European Union.
The dollar index, which measures the greenback's value
against a basket of six major currencies, touched a low of
95.373 at one point on Thursday, its weakest level
since Sept. 16.
The euro edged up 0.2 percent to $1.1202, having
pulled up from Wednesday's trough of $1.1123.
The New Zealand dollar edged lower after the Reserve Bank of
New Zealand (RBNZ) left the door wide open for another interest
rate cut this year.
The RBNZ kept its benchmark interest rate unchanged at 2.0
percent on Thursday but reiterated that further easing will be
The New Zealand dollar fell 0.2 percent to $0.7333.
Earlier on Thursday it had risen to as high as $0.7374, its
highest level in nearly 2 weeks.
(Reporting by Masayuki Kitano; Additional reporting by Swati
Pandey in Sydney; Editing by Eric Meijer)