Dec. 1 (Bloomberg) -- The Bank of Japan’s decision to offer commercial lenders short-term loans may not be enough to stem the yen’s gains, Bank of Tokyo-Mitsubishi UFJ Ltd. said.
The central bank said today following an emergency meeting that it will set aside $10 trillion yen ($115 billion) to provide three-months loans at 0.1 percent.
“The decision to offer only three-month loans has proved underwhelming,” Lee Hardman, a currency economist in London at Bank of Tokyo, wrote today. “It is unlikely to either have a material impact on economic recovery or alter the downward momentum in dollar-yen. In fact it may even exacerbate dollar weakness.”
The decision “disappointed the market which, following the announcement that the BOJ were calling an unscheduled meeting, had been expecting more radical steps,” Hardman wrote.
The yen weakened to as much as 87.54 per dollar, from 86.41 yesterday, before trading at 86.89 as of 10:15 a.m. in London.
To contact the reporter on this story: Anna Rascouet in London at arascouet@bloomberg.net
Last Updated: December 1, 2009 05:34 EST
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