By Kosaku Narioka
The yen fell to multi-month lows against other major currencies on Friday, driven by continued expectations for U.S. reflationary policies and weaker demand for the safe-haven yen as Japan's stock benchmark hit a new ten-month high.
Speculation has increased for U.S. fiscal stimulus, higher inflation and faster Federal Reserve rate increases after the election of Donald Trump as the next U.S. president earlier this month.
The Bank of Japan's new policy framework of limiting bond yield gains is helping increase the prospects of greater interest rate differential between the U.S. and Japan. Dollar-denominated, higher-yielding assets tend to attract more investments.
Read:Don't blame the dollar when the Trump rally gets smashed, in one chart (http://www.marketwatch.com/story/trump-rally-has-99-problemsbut-the-dollar-isnt-one-in-a-chart-2016-11-22)
"The dollar/yen is an easy choice" to bet for the dollar's ascent, said Seiichi Tanaka, head of FX spot trading at Mizuho Bank. A stronger performance of the Japanese stock market is also helping to reduce the demand for safe-haven assets such as the yen, market participants said. The benchmark Nikkei Stock Average's intraday high was the highest since Jan. 5 (http://www.marketwatch.com/story/japans-nikkei-stock-market-index-climbs-to-10-month-high-2016-11-24).
The dollar was at Yen113.35 after hitting as high as Yen113.90, the highest since March 15, according to EBS. The dollar was at Yen113.33 late Thursday.
The British pound was at Yen141.11 after advancing to Yen141.76, the highest since July 21. Sterling was at Yen141.11 late Thursday.
The euro was at Yen119.85 after hitting Yen120.15, the highest level since June 24. The euro was at Yen119.58 late Thursday.
Despite the dollar's recent broad strength, some market participants are reluctant to sell the euro further against the dollar because the European Central Bank could start slowing its bond purchases program, which would support the euro.
The euro could target the parity against the dollar if ECB continues its big bond buying program, Tanaka said. The euro was at $1.0573, compared with $1.0550 late Thursday.
The ICE U.S. Dollar Index , which measures the buck against a basket of six currencies, last traded around 101.63, slightly higher than where it was trading on Thursday, when it tapped a fresh 13-and-a-half year high.
(END) Dow Jones Newswires
November 25, 2016 01:15 ET (06:15 GMT)
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