Yen eases against major peers on weak GDP data

TOKYO: The yen eased against its major counterparts in Asia Monday, as a contraction in Japan's economy during the final quarter of 2015 sparked talk of another recession.

The world's number three economy shrank 0.4 percent in the October-December quarter -- an annualised 1.4 percent -- the Cabinet Office said Monday, dealing another blow to Prime Minister Shinzo Abe's attempts to kickstart growth and ramp up inflation.

For the whole of last year growth was a measly 0.4 percent.

"Japanese policy makers need to go on an all out war against the risk of a recession," Takuji Okubo, principal at Japan Macro Advisors, told Bloomberg TV.

The Bank of Japan "should keep on easing monetary policy", he added. "Abe should definitely cancel the sales tax planned for next year.

"Policymakers need to show the market they are aware of the risks and they are doing everything they can to prevent a recession."

In Tokyo, the greenback rose to 113.91 yen from 113.25 yen Friday in New York and 112.17 yen in Tokyo earlier that day.

The euro gained to 127.73 yen from 127.40 yen in US trade, while dropping to $1.1213 from $1.1250.

The weak growth figures will put a renewed spotlight on whether Abe will follow through with another sales tax hike next year, after a similar move in April 2014 threw the brakes on a nascent economic recovery.

The rise is seen as key to containing a spiralling national debt, but it could further dent spending and hurt the wider economy.

Solid US retail prices on Friday helped lift investor sentiment, although analysts warned against overt optimism.

"Better-than-expected US retail sales improved sentiment, but whether that continues will depend how markets react to Chinese trade data," Toshiya Yamauchi, a senior analyst at Ueda Harlow, wrote in a note to clients.

"If Chinese imports continue to shrink, market sentiment can easily go back to risk aversion."

China announced later Monday that exports fell 11.2 percent year-on-year in January in dollar terms, while imports tumbled 18.8 percent.

Among emerging market currencies, the oil-linked Malaysian ringgit rose 0.89 percent against the dollar as crude prices stayed above $29 a barrel.

The Indonesian rupiah gained 0.65 percent, South Korea's won advanced 0.29 percent, Taiwan's dollar was up 0.03 percent and the Philippine peso tacked on 0.34 percent.