LONDON (AFX) - The yen remained firm in early trade boosted by capital repatriation and by Bank of Japan governor Masaru Hayami's statement yesterday that he is reluctant to weaken the currency artificially, dealers said.
"The yen is heading back into fashion on capital repatriation and on Hayami's comments yesterday," 4CAST forex specialist Paul Bednarczyk said.
"Now there was a man speaking in the style of an independent central banker, saying he's not cutting interest rates and doesn't want the yen to be too weak," he said.
But dealers doubted the yen's strength will last, citing Japan's economic plight and renewed pressure for prime minister Yoshiro Mori to resign.
In the euro zone, the single currency was soft on speculative selling and the firm yen, dealers said.
They said investors have little expectation of a rate cut at the European Central Bank's fortnightly meeting today.
"If they do cut rates today, it means the ECB members have been telling us big porkies for the last couple of weeks," Bednarczyk said. In the UK, sterling remained firm despite fading hopes of an imminent rate cut.
"With the strong domestic data and low inflation outlook, we won't see any rate cuts before the election in early May. I think a lot of people had been looking for another one fairly soon after last week's move," he said.