The yen was steady at higher levels against the dollar and euro well into the European session, buoyed by hints that the Bank of Japan may yet move to tighten monetary policy in the country. Against the dollar and euro, the Japanese currency was at a one-month high. Alexandra Bechtel at Commerzbank Corporates and Markets said the yen got a lift on speculation of an imminent policy change by the Bank of Japan. "Speculation has been sparked by comments from BoJ governor Fukui, who said that the conditions for a policy change are being gradually met and that policy will be discussed at the next meeting on March 8/9," she said. Still, any move from the central bank is unlikely to come immediately. "The policy of so-called 'quantitative easing' will only be given up in several steps and it can initially be assumed that excess liquidity will be taken out of the market before the policy of zero interest rates is brought to an end in the autumn when rates are likely to be raised," said Bechtel. Under current policy, the BoJ has been flooding the market with excess liquidity. "The BoJ is nearly ready to embark on a campaign to mop up surplus liquidity in the banking sector," said Steve Pearson at HBOS. He added that Japanese CPI data for January, due on March 3, will be key. If it confirms that the annual core CPI inflation remains positive, the BoJ is seen likely to move. That aside, talk that China may be preparing to let the yuan appreciate further in the face of growing US pressure also helped prop up the yen.