Yen weakens as 'currency war' rhetoric heats up

TOKYO: The yen weakened further in Asian trade on Monday as criticism of the currency's slide heats up, with some warning that Tokyo's foreign-exchange policy could spark a global currency war.

The dollar bought 91.02 yen in Tokyo, up from 90.87 yen in New York on Friday, while the euro was at 122.55 yen from 122.28 yen.

The single currency was also at $1.3461 from $1.3457.

The Bank of Japan (BoJ) on Tuesday announced an open-ended easing plan and a two-percent inflation target to stoke growth, a move widely seen as bowing to political pressure.

The move led German Chancellor Angela Merkel to tell the World Economic Forum in Davos on Thursday that she as "not without some concern about Japan right now".

And Angel Gurria, head of the Organisation for Economic Co-operation and Development (OECD), warned Japan was treading a "fine line" between defending its currency and putting trading partners at a disadvantage.

Jens Weidmann, the head of Germany's Bundesbank, as well as the head of the US Federal Reserve Bank of St. Louis and a Russian central banker all warned after the BoJ move that a currency war could be a consequence of the yen's fall.

However, on Monday, Japan's Finance Minister Taro Aso rejected global concerns that Tokyo was orchestrating a slide in the unit.

"Japan's top priority is to pull out of a deflation-induced economic downturn, and the yen's decline is a consequence of it," he was quoted as saying by Dow Jones Newswires.

"We didn't say anything when the dollar and the euro were being pushed lower."

The yen hit record highs against the dollar in late 2011 -- sitting around 75 to the greenback as the US Federal Reserve embarked on its own monetary easing -- and remained strong through much of last year, hurting exporters.