Yen sells off after strong dollar bids (Reuters) (17-03-2010)

TOKYO, March 17 (Reuters) - The yen slipped on Wednesday, reversing direction after players disappointed by only a modest easing step by the Bank of Japan tried to drive it higher and ran into a wall of selling.

After pressure from the government for action to beat deflation, the BOJ decided in a 5-2 vote to double the size of a fixed rate fund supply tool adopted in December to 20 trillion yen ($222 billion) but kept the loan duration at three months, instead of six months as some expected.

The yen initially rose after the move as the three-month duration decision disappointed some who had looked for more and prompted yen buying.

But strong dollar bids near 90.00 yen saw yen buyers quickly sell it back, while traders reported dollar buying interest near the day's lows from Japanese life insurers and non-Japanese players.

The dollar rose 0.4 percent to 90.64 yen after dipping to the day's low of 90.02 in the wake of the decision.

The outlook for dollar/yen now depends on U.S. rate rise expectations, and appetite to invest in riskier assets and currencies, although yen inflows from the fiscal year end repatriation remain a risk.

The euro rose 0.6 percent on the day to 125.00 yen after falling to 124.10 yen and edged up 0.2 percent to $1.3787, having jumped nearly 0.7 percent on Tuesday.

Source: Reuters