TOKYO: The Japanese yen weakened against major currencies in Asian trade on Tuesday afternoon following the Bank of Japan's surprise decision to further ease monetary policy.
The unit softened to 102.55 against the euro, compared with 102.34 late Monday in New York, while it also weakened to 77.91 against the dollar, from 77.58.
The central bank on Tuesday increased its asset purchase programme by 10 trillion yen ($130 billion) to about 65 trillion yen, as it looks to put an end to the deflation that has wracked the economy for years.
Additional easing by a central bank increases the supply of money in the economy, weakening the currency.
The bank's statement "gives us the impression that the BoJ has strengthened its pledge to keep monetary policy easy for the time being," Mitsuru Sahara, a senior trader at Bank of Tokyo Mitsubishi UFJ, told Dow Jones Newswires.
"I expect overseas investors to show a bigger reaction than Japanese investors. So the dollar may rise against the yen further in European and US trading hours," Sahara added.
The euro was under pressure against major currencies after Moody's cut the debt ratings and outlooks of several European countries.
The agency downgraded Italy, Spain and Portugal and put France, Britain and Austria on warning, saying they were increasingly vulnerable to the eurozone crisis.
Casting doubt over whether Europe's leaders were doing enough to reverse the downslide of the region's economy and financial sector, Moody's also cut its ratings for Slovenia, Slovakia and Malta.
The move dampened sentiment that had been boosted on Sunday when Greek lawmakers agreed to a raft of austerity measures considered crucial to the country qualifying for a second bailout.
The euro fell to $1.3160 from $1.3191 late Monday.
"The rate cuts came just when the euro seemed to be recovering" over prospects of a possible resolution to the Greek debt crisis, Bank of Tokyo-Mitsubishi UFJ senior analyst Sumino Kamei said.
"The euro-zone finance ministers' meet is up-coming, but Greece may face more hurdles before a second bailout," she said.
The dollar was stronger against other Asian currencies.
It rose to 9,053.75 Indonesian rupiah from 9,023.00 rupiah on Monday and to 42.66 Philippine pesos from 42.47 pesos.
The greenback also firmed to 1,124.50 South Korean won from 1,123.10 won, to Tw$29.56 from Tw$29.49, to 30.86 Thai baht from 30.81 baht, and to Sg$1.2634 from Sg$1.2529.
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