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 102.51 yen, having traded at around 101.95 yen before the BoJ decision, sending Tokyo's headline Nikkei stock index soaring 3.13 percent.
The dollar was trading at 101.81 yen in London late Monday.
The euro also jumped against the Japanese currency at 140.63 yen from 139.42 yen, while it rose to $1.3714 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.
Bank chief Haruhiko Kuroda compared the move to fire up lending to firms and consumers to putting new tyres on a car.
We have "significantly boosted the capacity of our engine -- this is like we put on new tyres to make the most of that engine", he told reporters in Tokyo.
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.
The dollar rose against Asia-Pacific currencies.
It strengthened to 11,843 rupiah from 11,692 rupiah on Monday, to 44.55 Philippine pesos from 44.54 pesos and to 32.41 Thai baht from 32.35 baht.
The dollar also rose to Sg$1.2613 from Sg$1.2597, to 1,065.73 South Korean won from 1,061.83 won and to 62.15 Indian rupees from 62.06 rupees.
The Australian dollar weakened to 90.42 US cents from 90.49 cents, while the Chinese yuan fetchedd 16.90 yen against 16.72 yen.
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