Yen slumps broadly after soft Japan CPI

TOKYO, Jan 26 (Reuters) The yen slumped across the board on Friday after slightly soft consumer price figures cast doubt on whether the Bank of Japan will raise interest rates next month.

Core nationwide CPI rose 0.1 percent in December from the same period last year, slightly lower than expectations for a 0.2 percent rise.

''Following the CPI data, the market remains split on whether rates are going to rise,'' said Takashi Kido, forex manager at Sumitomo Trust and Banking.

The dollar climbed to the day's high around 121.60 yen shortly after the announcement, inching closer to a four-year high of 121.80 yen touched earlier in the week.

The euro jumped nearly one yen from the day's low to around 157.40 yen edging closer to a record high touched on Wednesday.

The data also pushed the yen lower against other currencies, with the Japanese currency trimming some gains made against rivals like the euro, sterling and Australian and New Zealand dollar in past sessions due to an unwinding of the carry trade.

The yen had rallied this week as investors abandoned some trades in which they had borrowed the low-yielding yen to invest in higher-yielding currencies.

The yen also remained under selling pressure after deputy German economy minister Bernd Pfaffenbach on Thursday said that his country was not planning to put recent yen weakness on the agenda of an upcoming Group of Seven meeting.

His comments came after Hiroshi Watanabe, Japan's top financial diplomat, said that he did not expect the yen to be a major issue at the meeting, which Germany will host next month.

REUTERS PDS RN0745