LONDON: The yen surged by more than 2 percent against the dollar on Thursday to hit its strongest level in almost two years, after the Bank of Japan held off from expanding its monetary stimulus programme.
The safe-haven currency, which also hit multi-year highs against the euro and sterling, has climbed around 7 percent against the dollar since the start of June as worries that Britain could vote to leave the European Union in a referendum next week have prompted a flight to safety.
The Japanese currency was also boosted late on Wednesday by a statement and news conference from the U.S. Federal Reserve, which lowered its economic growth forecasts, cementing expectations that it will not tighten policy next month. The Fed did, nevertheless, signal that it was still planning to raise interest rates twice this year.
The dollar fell by as much as 2.3 percent against the yen to hit a 22-month low of 103.555 yen. But the greenback edged back up to 104 yen, down 1.9 percent on the day, after BOJ Governor Haruhiko Kuroda said at a news conference that the central bank "won't hesitate in taking additional easing steps if needed" to reach its 2 percent inflation target.
In London, Societe Generale currency strategist Alvin Tan said the yen's surge was more down to the Fed's dovish stance than the BOJ's refraining from further easing, which had been expected.
Tan added that the yen's rise had been exacerbated by the triggering of a large number of stops around 105.60 yen, which he said was a key technical level.
The Swiss National Bank, which, like the BOJ, faces unwanted safe-haven demand for its currency, kept interest rates unchanged, as expected. But SNB Governor Thomas Jordan said the central bank would be closely watching Britain's EU vote next week, and would "take measures if required".
The Swiss franc eased a touch after Jordan's comments to trade flat on the day at 1.0826 francs per euro. But that still left it close to a six-month high of 1.0791 hit earlier in the week.
"If we really were to see a Brexit next week, the franc would no doubt initially appreciate massively as a safe haven, forcing the SNB to intervene briskly," wrote Commerzbank strategists in a note to clients.
"And if there is no Brexit, it can use the billions saved beforehand to gently push the euro back towards 1.10 francs."
Worries about a possible vote for an exit from the EU in just a week's time dominated across markets, with another poll on Thursday that put the "Leave" camp ahead sending sterling down by more than half a U.S. cent.
Against the yen, sterling fell by as much as 2.5 percent to hit a three-year low of 146.40.
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