Yen drops to 156 level vs. dollar as BOJ keeps current easing policy

TOKYO (Kyodo) — The yen sank to the lower 156 level against the U.S. dollar Friday in Tokyo as investors sold the currency after the Bank of Japan left unchanged its current monetary easing policy.

The yen hit the new 34-year low after hovering in the upper 155 zone in the morning. The yen has been sold recently against the dollar as solid U.S. 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.

The euro was quoted at $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 percent, from Thursday at 37,934.76. The broader Topix index finished 22.95 points, or 0.86 percent, 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 point from Thursday’s close to 0.930 percent at one point, its highest level since November.