By Miho Nakauchi
TOKYO (MarketWatch) -- The dollar fell against the yen in Asia Wednesday as as a widely expected decision by the Bank of Japan to further ease monetary policy prompted Asian speculators to lock in profits by selling the greenback.
But the U.S. currency recovered most of its losses as investors shifted their focus to other dollar-supportive factors such as firm Tokyo shares, and dealers said the greenback is likely to keep rising later in the global day.
In its policy board meeting, the BOJ decided that it will offer another Y10 trillion in three-month cash at a 0.1% fixed rate to financial institutions, on top of the Y10 trillion it offered in December.
As the decision had already been factored into trading, "the dollar was initially driven by 'sell-on-the-fact' forces," said Hiroshi Maeba, a senior dealer at Nomura Securities. The dollar fell to a low of Y90.02 from around Y90.40 before the BOJ announcement.
But the dollar soon recouped most of its losses, climbing to Y90.39 as of 0450 GMT. Meanwhile, the euro changed hands at Y124.59, up from Y124.31 in New York Tuesday.
Dealers said the dollar may continue to rise against the safe-haven yen if European and U.S. share markets follow Tokyo higher.
Market participants are also focused on upcoming U.S. economic data, dealers said, including Thursday's U.S. consumer price index for February. Economists surveyed by Dow Jones Newswires expect the index to rise 0.1% compared with a 0.2% gain in January. Any better than expected figures could push the dollar to Y91.00 in the coming days, and the euro to Y125.50, traders said.
Against the dollar, the euro stood at $1.3784 from $1.3776 in New York overnight. The ICE Dollar Index, which tracks the U.S. currency against a trade-weighted basket of currencies, was at 79.668 from 79.661.