LONDON, Jan 19: The safe-haven yen fell on Tuesday on relief that China's fourth-quarter economic growth matched forecasts and improved risk appetite on expectations that further monetary easing from the world's second largest economy could be announced soon.
China's fourth-quarter gross domestic product grew 6.8 per cent from a year earlier, matching expectations - but growth of industrial output and retail sales in December slightly missed forecasts. ECONCN
Overall gross domestic product growth was a tick lower from the previous quarter, boosting expectations that monetary easing measures were imminent, possibly before Lunar New Year holidays in early February.
The offshore yuan slipped around 0.2 per cent CNH=D3 against the dollar to trade at 6.60 yuan per dollar in London trade. The dollar was overall firmer, rising 0.2 per cent against a basket of currencies .DXY and 0.5 per cent against the yen to trade at 117.92 yen JPY=.
The dollar had hit a five-month low of 116.51 on Friday and investors are still worried about global growth prospects, a factor which will limit the yen's losses. "It is too early to call an end to the yen appreciation trend," said Yujiro Goto, currency strategist at Nomura. "We had expected Chinese data to be a bit weaker, but it's not too bad and that is supporting risk sentiment."
Investor risk appetites have been hit in the New Year on renewed concerns about global growth, especially a slowdown in China and whether authorities in Beijing can manage it. That has supported safe-haven assets like Bunds and Treasuries and pushed the yen higher in the currency market. Indeed, the yen has been the best performer this year among major currencies with a gain of about 2.2 per cent against the dollar.
"At the heart of the yen's strength are falls in the yuan, which were perceived to be negative on the global economy," said Shunsuke Yamada, chief Japan currency strategist at Bank of America Merrill Lynch.    ? Agencies