TOKYO: The yen tumbled in Asia on Tuesday after the Bank of Japan (BoJ) held off expanding its asset-buying programme but said it would boost some lending schemes to stimulate borrowing.
The greenback jumped to 102.66 yen from around 101.95 yen before the BoJ decision, sending Tokyo's headline Nikkei stock index soaring more than 3.0 percent.
The dollar was trading at 101.81 yen in London late Monday.
The euro also jumped against the Japanese currency at 140.74 yen from 139.42 yen, while it rose to $1.3709 from $1.3695 in London.
The greenback's jump came in tandem with a rally for the Nikkei, which may have taken is cue from the BoJ move to inflate the size of two lending programmes, said Junichi Ishikawa, market analyst at IG Securities.
Wrapping up a two-day policy meeting, the BoJ said it would keep its massive easing programme in place, in line with expectations. However, it also decided to double the sum of loan schemes to banks in a bid to stimulate lending to firms and to finance growth-stoking projects such as environmental research and natural resources development.
Analysts are widely predicting the BoJ would have to expand its asset-buying plan later this year to counter any slowdown from a sales tax hike in April. Further easing would be likely to weigh on the yen, as the US Federal Reserve rolls back on its own stimulus programme.
All eyes are now on a press briefing by BoJ governor Haruhiko Kuroda later in the day to see if the bank chief hints at future policy moves.
"The bigger surprise could well be if Kuroda sounded more dovish, particularly after the softer GDP figures released yesterday, given that the central bank had anticipated some temporary strengthening in demand ahead of the April consumption tax hike," BNP Paribas said in a note.
The BoJ meeting comes a day after fresh data showed that while Japan's economy expanded by 1.6 percent over last year, it slowed to 0.3 percent in the October-December quarter, presenting a major challenge for Prime Minister Shinzo Abe and his bid to reverse almost two decades of deflation.
The figures exacerbated fears about the economic impact of the sales tax rise, seen as crucial for bringing down Japan's eye-watering national debt.
Comments
Comments are closed for this article.