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Yen slips after Japan posts record trade deficit

The yen slipped Thursday after Japan announced a record trade deficit for 2012, ending a rally fuelled by disappointment over the Bank of Japan's recent monetary policy announcement.

The dollar bought 89.31 yen in Tokyo afternoon trade, from 88.56 yen in New York late Wednesday, while the euro was at 118.90 yen, from 118.00 yen.

The single currency fetched $1.3312 against $1.3315 ahead of the release of eurozone economic data later in the day.

Japan said it logged a record 6.92 trillion yen ($78 billion) deficit in 2012, as exports to China and the European Union tumbled, but the gloomy data fell within economists' expectations.

"Although trade deficits have been one of the factors pushing the yen down, most of them had been priced in by the market," said Minori Uchida, chief forex analyst at the Bank of Tokyo-Mitsubishi UFJ.

Japan's trade deficit was unlikely to keep widening in 2013 as exports to China should pick up, with a spike in energy imports abating, Uchida said.

Japan's power bills soared as it turned to pricey fossil-fuel alternatives after switching off its nuclear reactors following the atomic crisis at Fukushima in 2011.

"We see 2012 as the worst and the trade account could improve slightly in 2013, although there is a long way to go before we have a trade surplus," Uchida told Dow Jones Newswires.

On Tuesday, the Bank of Japan said it would carry out monetary easing on an open-ended basis and adopted a two percent inflation target following pressure from the government.

The unlimited asset-purchase scheme -- similar to the US Federal Reserve's quantitative easing -- is to start next year.

However, dealers, who had been selling the yen in recent weeks on expectations of such a move, were disappointed the BoJ did not unveil any more detail or further measures.

Eyes were also on the eurozone for fresh economic data, with the euro given support by a positive German investor sentiment survey earlier this week.

Weighing on the currency, the International Monetary Fund cut its global growth forecasts slightly Wednesday and predicted that the eurozone, mired in a public debt crisis, would spend a second year in recession in 2013.

The dollar was mostly stronger against other Asia-Pacific currencies, rising to 9,755 Indonesian rupiah from 9,660 rupiah on Wednesday, and to 53.85 Indian rupees from 53.73 rupees.

The greenback also rose to 1,067.04 South Korean won from 1,065.82 won, to 29.83 Thai baht from 29.77 baht and to Tw$29.02 from Tw$29.01.

It fell to Sg$1.2274 from Sg$1.2282 and was flat at 40.62 Philippine pesos.

The Australian dollar weakened to $1.0522 from $1.0538, while China's yuan fetched 14.31 yen from 14.22 yen.