* BOJ to start open-ended asset buying in 2014
* Doubles inflation target to 2 pct as expected
* Yen slips briefly after BOJ decision but later rises
By Masayuki Kitano
SINGAPORE, Jan 22 (Reuters) - The yen briefly fell against the dollar on Tuesday after the Bank of Japan surprised markets by adopting an open-ended commitment to buy assets, but later regained ground as the new scheme for additional purchases only comes into effect next year.
The BOJ, which has been under intense political pressure to overcome deflation, also doubled its inflation target to 2 percent as had been widely expected.
At its two-day meeting that ended on Tuesday the central bank decided that from 2014 it would switch to an open-ended approach of buying a certain amount of assets each month without setting a deadline for completing the purchases.
The BOJ had previously pledged to pump 101 trillion yen ($1.1 trillion) into markets with its asset-buying and lending programme by the end of this year, but had made no commitment on whether to maintain the balance beyond 2014.
The dollar rose to as high as 90.18 yen right after the BOJ's decision, nearing a 2-1/2 year high of 90.25 yen that had been set on Monday.
The dollar, however, gave up the gains and last fetched 89.32 yen, down 0.3 percent on the day.
The BOJ met expectations by setting a 2 percent inflation target and delivered a surprise by adopting the open-ended pledge to buy assets, said Roy Teo, FX strategist for ABN AMRO Bank in Singapore.
Still, one point to note is that asset buying under the open-ended pledge is only set to start from 2014, he said.
"From 2014 onwards it's positive... From now until then they are not doing anything more aggressive to weaken the yen," Teo said.
Stop-loss selling added to the dollar's drop, said Jeffrey Halley, FX trader for Saxo Capital Markets in Singapore.
"The BOJ increase in asset purchases is only commencing in 2014. So no strong immediate increase in easing," Halley said.
"This was combined with the whole street having dollar/yen stops under 89.50 yen," he added.
The euro rose to as high as 120.18 yen after the BOJ's decision, but its rise also ran out of steam. The euro last stood at 119.25 yen, down 0.2 percent on the day.
Against the dollar, the euro edged up 0.3 percent to $1.3356 .
The yen will probably stay weak over the medium term, even if details of the BOJ's open-ended asset buying pledge leave a sense that the central bank may have under delivered, said Sim Moh Siong, FX strategist for Bank of Singapore.
This is especially the case when taking into account a forthcoming change in BOJ leadership, with BOJ Governor Masaaki Shirakawa's term ending in April, he said.
"I think the yen may consolidate, may pause...after such a rapid move. But overall we could expect further weakness ahead," he added.
Prime Minister Shinzo Abe, who has piled pressure on the BOJ for bolder efforts to beat deflation, has said he would like to choose someone who can implement bold monetary policy to succeed Shirakawa.
With its rise to a 2-1/2 year high on Monday, the dollar had risen nearly 14 percent versus the yen from a trough hit back in mid-November.