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FOREX-Yen falls after BOJ calls meeting; Aussie slides

Published 11/30/2009, 11:48 PM
Updated 11/30/2009, 11:51 PM
EUR/JPY
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AUD/JPY
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* Yen falls broadly after BOJ says to hold policy meeting

* BOJ meeting due at 0500 GMT, governor speaks at 0730 GMT

* RBA raise rates from 3.50 pct to 3.75 pct, as expected

* Aussie faces selling on profits after RBA

By Satomi Noguchi

TOKYO, Dec 1 (Reuters) - The yen fell across the board on Tuesday with the market speculating the Bank of Japan was preparing to take fresh steps to support the economy, while the Reserve Bank of Australia raised interest rates as expected and prompted some selling of the Aussie to book profits.

Euroyen futures jumped and the yen fell against the dollar after the BOJ surprised the market earlier in the day by saying it would hold an extraordinary policy meeting at 0500 GMT to discuss recent economic and financial developments, coming after Japan's finance minister said he was open to a return to quantitative easing.

Australia's central bank raised its key cash rates by 25 basis points to 3.75 percent, saying three hikes in a row was a material adjustment that would help sustain economic growth.

"The Aussie fell quickly after the RBA rate decision because the outcome was in line with what had been expected and prompted investors to take profits," said a senior trader for a Japanese brokerage firm.

"Now the RBA is out of the way, the market is concentrating on the outcome of the BOJ meeting and yen moves," the trader said.

A return to the BOJ's narrow form of quantitative easing, in which it flooded the financial system with cash, has so far seemed unlikely because those inside the BOJ don't think the policy adopted between 2001 and 2006 was very effective.

BOJ Governor Masaaki Shirakawa is scheduled to hold a news conference from 0730 GMT.

"The yen was sold on a view that the Bank of Japan will take additional steps to expand easing policy, as there has been a sense from the government side to urge the central bank to take some policy action," said Hideki Hayashi, global economist at Mizuho Securities.

The dollar rose more than 1.0 percent against the yen after the BOJ's announcement to 87.49 yen on trading platform EBS, rebounding further from a 14-year low of 84.82 yen hit last week.

The euro also rose more than 1 percent to its high for the day so far of 131.28 yen and the Australian dollar was up 1 percent at 79.90 yen.

The Australian dollar was steady at $0.9144 after a choppy trade down on the RBA's rate hike.

The euro was steady on the day at at $1.5014 and the dollar index, a measure of its strength against six major currencies, was flat at 74.886. (Additional Reporting by Kaori Kaneko and Charlotte Cooper; Editing by Joseph Radford) ((Email: charlotte.cooper@thomsonreuters.com; +81 3 6441 1870; Reuters Messaging: charlotte.cooper.reuters.com@reuters.net)) ((If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com))

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