BOJ plans to keep current easing policy
Bank of Japan chief Kazuo Ueda said yesterday the central bank does not see any major impact of a weak yen on trend inflation at this point, but it will continue to monitor developments.
Speaking at a press conference after a two-day policy-setting meeting, Ueda reiterated that the BOJ would consider a policy change if the weak yen's impact on prices "cannot be ignored." Trend inflation excludes temporary factors.
He said an additional interest rate hike will depend on economic data, adding that the BOJ will continue with its government bond buying.
The yen sank to the lower 156 level against the US dollar in Tokyo as investors sold the currency after the Bank of Japan left unchanged its current monetary easing policy.
The yen has been sold recently against the dollar as solid US economic data has fueled expectations that the Federal Reserve will keep interest rates elevated for a while amid persisting inflation.
At 3 p.m., the dollar fetched 156.10-11 yen compared with 155.59-69 yen in New York and 155.62-64 yen in Tokyo at 5 p.m. Thursday.
There was speculation that some policy adjustment might be announced to curb the yen's depreciation, but the outcome disappointed some investors and resulted in yen selling."
The euro was quoted at US$1.0724-0728 and 167.40-47 yen against $1.0725-0735 and 166.94-167.04 yen in New York and $1.0720-0721 and 166.83-87 yen in Tokyo late Thursday afternoon.
The market's latest reaction came after speculation emerged that the BOJ could reduce bond purchases following a news report that the bank was considering ways to taper its bond buying at the policy meeting.
"There was speculation that some policy adjustment might be announced to curb the yen's depreciation, but the outcome disappointed some investors and resulted in yen selling," said Takuya Kanda, senior researcher at the Gaitame.com Research Institute.
The Nikkei stock index briefly climbed nearly 500 points as the central bank hinted accommodative monetary conditions are likely to continue for the time being, providing a sense of relief in the stock market, brokers said.
The 225-issue Nikkei Stock Average ended up 306.28 points, or 0.81 per cent, from Thursday at 37,934.76. The broader Topix index finished 22.95 points, or 0.86 per cent, higher at 2,686.48.
On the top-tier Prime Market, gainers were led by marine transportation, real estate and pharmaceutical issues.
Heavyweight semiconductor-related issues were bought back after the previous day's plunge and financial issues rose after higher Japanese government yields raised the prospect of improved profits.
Japan's benchmark 10-year government bond yield rose 0.040 percentage points from Thursday's close to 0.930 per cent at one point, its highest level since November.