NEW YORK (AFP) – The yen surged about three per cent against the dollar on Thursday after the Bank of Japan left markets in shock by failing to deliver more stimulus for the struggling Japanese economy.
Traders had widely expected the central bank to unveil fresh measures to shore up the world s number-three economy after this month s deadly earthquakes in southern Japan and a series of weak data.
But, after a two-day meeting, the BoJ announced it would stand pat, saying it wanted to gauge the effects of the negative interest rate policy introduced in January.
“The main takeaway from the BoJ meeting is the Japanese feel no immediate pressure to use monetary policy or currency intervention to turn around the economy,” said Kathy Lien of BK Asset Management.
“They feel like they ve done enough for the time being and want to see how the economy reacts first.”
At 2100 GMT Thursday, the dollar bought 108.11 yen, down from 111.47 at the same time Wednesday.
The greenback ended the day lower against its major rivals after the US government reported first-quarter economic growth slowed to a paltry 0.5 per cent annual rate from 1.4 per cent in the fourth quarter.
Analysts had expected a better 0.9 per cent. The data came a day after the Federal Reserve left ultra-low interest rates unchanged citing the slowing economy.
“While a weak quarter was largely expected … the data will continue to keep the outlook for the next rate hike by the Fed very clouded,” said Omer Esiner of Commonwealth Foreign Exchange.