* 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
By Masayuki Kitano
SINGAPORE, Jan 14 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
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
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,"
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
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.