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Currency hits a four-month low of 101.迷你倉36 to the greenback, after BOJ chief vows to act if inflation target is threatenedTokyoTHE yen slid to a four-month low against the US dollar yesterday, as market conviction grew that the Japanese currency could be headed significantly lower in coming weeks as the Bank of Japan (BOJ) goes all out to meet its inflation target and Prime Minister Shinzo Abe's government strives to meet politically important economic growth targets.The yen hit 101.36 to the dollar in Tokyo - close to the 101.54 level it sank to in July in the wake of the BOJ's dramatic monetary easing assault, while dropping to a four-year low against the euro, at 136.54, and giving ground against the pound as well.Dealers said the yen could drop as low as 110-115 against the dollar in coming months as a series of factors conspire to drive it southwards.Meanwhile, the Nikkei 225 stock index hit a six-month high of 15,381.72, capping a series of sharp gains in recent days as the weakening yen spurred hopes of rising corporate profits on the back of stronger exports.Among the factors pushing the yen down are indications that the BOJ may step up monetary easing in pursuit of its inflation target; an apparent willingness by the authorities to intervene in currency markets if the yen shows signs of strengthening; widening interest rate differentials; and a resumption of yen "carry trades".BOJ governor Haruhiko Kuroda said in Parliament yesterday that the central bank will act if necessary to prevent changes in the economy from derailing its target of achieving 2 per cent annual inflation in consumer prices in about two years' time.The BOJ's Policy 自存倉oard left monetary policy unchanged at the end of its latest two-day monthly meeting on Thursday, but Mr Kuroda's statement yesterday appeared to indicate that the central bank was ready to take a more aggressive easing stance if necessary.This contrasts with expectations that the US Federal Reserve Board could begin tapering its own quantitative easing (QE) policy early in the new year - a move that would widen the interest rate differential between the dollar and the yen, providing further incentive to sell the yen.With a weaker yen effectively guaranteed by the BOJ's monetary stance and by Finance Minister Taro Aso's recent suggestion that authorities reserve the right to intervene in foreign exchange markets to prevent it from strengthening unduly, the yen is now open for a resumption of yen "carry trades", dealers noted.Carry trades refer to the strategy of borrowing funds in a low interest rate currency and investing the proceeds in a higher-yielding currency - a tactic that pushes down the value of funding currency and raises the value of the currency invested in.The yen was for several years a popular currency for funding such transactions until aggressive monetary easing by the Fed drove down US interest rates and the dollar, reducing the incentive to borrow dollars for carry trades. Now, the situation is reversing again.A weakening yen will help Mr Abe secure the economic growth needed to maintain his popularity at a time when other government policies, such as promoting Japan's entry into the Trans-Pacific Partnership, nuclear power policy and a controversial new official secrets Act, threaten to undermine voter support, analysts say.迷你倉