After the decision, the yen fell more than 0.6 percent against the dollar to its lowest levels during the session at 143.78, but it later compensated for some of those losses. The price of the Japanese currency in the latest trading reached 143.46 yen to the dollar.
Against the euro, the yen also fell to its lowest level in a week at 157, and in the latest trading it was down approximately 0.5 percent to 156.72 per euro.
While the result was in line with market expectations, some investors were looking for signs of whether the central bank might hint at a move to eventually move away from negative interest rates.
“Before the meeting, there were expectations of policy changes, including adjustments to the wording of the statement,” said Hirofumi Suzuki, chief foreign exchange market strategist at SMBC.
The central bank said in a statement that it “will not hesitate to take additional facilitative steps if necessary,” adding that uncertainty about the economy is very high.
Meanwhile, the US currency fell to its lowest levels in nearly five months against the risk-sensitive Australian and New Zealand dollars, as market sentiment remained high in light of the possibility of the Federal Reserve (the US central bank) starting to cut interest rates next year.
The Australian dollar rose 0.19 percent to $0.6719, after reaching a peak of $0.6736 in the previous session, recording its highest levels since July 31.
The New Zealand dollar also rose 0.25 percent to $0.62275, which is not far from yesterday Monday's high level of $0.6250.
Minutes from the Reserve Bank of Australia's December monetary policy meeting released Tuesday showed the central bank considered raising interest rates, but decided there were enough encouraging signs on inflation to pause pending more data.
There was no significant change in the US dollar index, recording 102.53.
Some Federal Reserve officials disagreed with market expectations regarding how close the Federal Open Market Committee was to lower interest rates, but their statements did not greatly affect market prices or curb the decline of the US currency.
The core personal consumption expenditures price index, the Fed's preferred measure of core inflation, is scheduled to be released this week, providing more clarity on whether inflation has slowed enough for the bank to start easing monetary policy next year.
The British pound rose 0.08 percent to $1.2657, and the euro rose 0.04 percent to $1.09265.
However, Joseph Capurso, head of international and sustainable economics at the Commonwealth Bank of Australia, said the two currencies remain vulnerable to turmoil in oil and gas markets, given their increasing dependence on energy from the Middle East.
Attacks by the Iran-aligned Houthis in Yemen on ships in the Red Sea have disrupted maritime trade and forced companies to reroute ships, leading to higher oil prices with investors concerned about disruption to trade as well as supply costs.
“Oil and gas supplies in the Middle East are at risk,” Capurso said. “That is why the euro and the British pound are more at risk of significant declines if these conflicts worsen or expand.”
#yen #falls #Bank #Japan #adheres #ultraloose #monetary #policy