SINGAPORE, Aug 7 Reuters The yen slumped on Wednesday after an influential Bank of Japan official played down the chances of a nearterm rate hike in a fresh twist to the week that started with massive moves driven by U.S. recession fears and unwinding of popular carry trades.

The yen was down more than 2.35 at 147.80 per dollar having touched session lows of 147.935 following the comments from BOJ Deputy Governor Shinichi Uchida.

As we are seeing sharp volatility in domestic and overseas financial markets, it39;s necessary to maintain current levels of monetary easing for the time being, Uchida said.

His remarks, which contrasted with Governor Kazuo Ueda39;s hawkish comments made last week when the BOJ unexpectedly raised interest rates, sent the Nikkei higher and weighed on Japanese government bond yields.

The BOJ39;s hike last week along with bouts of interventions from Tokyo in early July led investors to bail out of oncepopular carry trades, in which traders borrow the yen at low rates to invest in dollarpriced assets for higher returns.

That took the yen to a sevenmonth high of 141.675 per dollar on Monday, from the 38year lows of 161.96 it was languishing in just at the start of July.

But Uchida39;s comments could still prop up the carry trade, investors say, even with more room for unwinding of the trades.

Uchida has saved the carry trade for now, said Rong Ren Goh, a portfolio manager in the fixed income team at Eastspring Investments.

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