Reply #9: Yen falls sharply as market looks to BOJ meeting

[EuroObserver]

TOKYO, March 6 (Reuters) - The yen fell sharply on Monday as some investors bet that Japanese interest rates would stay far lower than those of other major currencies even after an expected end to the Bank of Japan's ultra-loose monetary policy.

The BOJ is seen ending its five-year-old "quantitative easing" policy as early as this week, and many market players expect the central bank to raise rates from virtually zero by the end of the year.

But the dollar's failure to hold convincingly below 116 yen last week despite mounting speculation for a BOJ policy shift encouraged investors to pile back into higher yielding currencies including the U.S. and Australian dollars, traders said.

"We're seeing continued interest from Japanese investors to sell the yen and go for yield," said Noriyuki Kato, treasury manager at State Street in Tokyo. "And the market has already jumped on the BOJ issue so by the time the fact comes out it could be a non-event."

The dollar hit one-month lows against the euro, Swiss franc and sterling on Monday, dented versus the euro-zone's currency by growing expectations that the European Central Bank will keep boosting interest rates. ...more...