The dollar was little changed against the yen in afternoon trade, having come off the lows seen following overnight weakness in New York, dealers said. They said the market is generally very quiet, with investors clearly not wanting to take any major initiatives ahead of the announcement tomorrow of the government's bank bad loan and anti-deflation packages. In addition, the Bank of Japan monetary policy board is also meeting tomorrow, with local newspaper reports saying it may consider buying an additional 400-500 billion yen in government bonds per month to support reform plans.
Against this background, the market is basically adjusting positions. Naoya Murata, a dealer at UFJ Bank, said that after touching a low of 123.17 yen, investors bought into the dollar along with support from some trust funds.
"The market is very quiet now. Market participants are waiting to see the deflation package before taking fresh positions. They also want to wait for the outcome of the BoJ meeting tomorrow. They are only adjusting their positions for now," Murata said.
He said there has been speculation that the central bank may take some action tomorrow supportive of the government's measures, possibly moving to increase the amount of bond purchases so as to increase liquidity further.//www.ananova.com