The New Zealand dollar fell against the yen before the Bank of Japan's meeting today as traders trimmed short positions in the Japanese currency to guard against the central bank under-delivering on monetary easing.
The kiwi fell to 78.15 yen from 78.57 yen at 5pm in Wellington yesterday. The currency rose to 84.19 US cents from 84.02 cents.
The BOJ is expected to boost monthly bond purchases by about 50 per cent to 5.2 trillion yen at the conclusion of its two-day meeting though there are concerns new Governor Haruhiko Kuroda may struggle with his own board to get as bold a move as he would want to weaken the yen and end deflation.
"As we head into the meeting investors are pretty keen to take profit on shorts and run into the meeting square," said Mike Jones, a strategist at Bank of New Zealand. "If the BOJ delivers and eases boldly, every man and his dog will be rushing to put those shorts back on."
A short position is a bet a currency is going to decline.
