Yen slides on news BoJ to target credit

Japan's central bank may help to finance lending by some of the country's lenders as it studies measures to help offset further reductions in its main policy interest rates into negative territory, according to a report in Bloomberg.

Overnight on Friday, the newswire reported that the Bank of Japan might offer negative rates on its so-called stimulative lending facility which were currently at 0%, citing "people familiar with the matter".

The main currency pairs were immediately set in motion as the headlines broke on traders' terminals and were picked up by rivals newswires.

As of 08:05 dollar/yen was 1.01% higher at 110.57, alongside gains in Euro/Jpy of 1.01% to 124.8. To take note of, the Topix index of bank stocks was sent 5.2% higher by the move. Japanese lenders have been seen as particularly vulnerable to negative interest rates.

The pound was 1.15% stronger versus the yen, at 158.58.

In parallel, the US dollar was also higher against the South Korean won, advancing by 0.9% to 1,143.22, with some market chatter referencing speculation of new easing measures by authorities in Seoul.

Analysts have increasingly been anticipating further easing moves from authorities in Tokyo, especially given the further easing expected from the European Central Bank and Riksbank.

Of the 41 analysts tracked by Bloomberg, a small minority of 23 expected the BoJ to announce some further step when it adjourned its upcoming two-day policy meeting ending on 28 April.