The dollar slumped below ¥122 yen in Tokyo trading on Friday, reflecting investors’ disappointment over the Bank of Japan’s monetary policy decision.
At 5 p.m., the dollar was at ¥121.79-80, down from ¥122.42-42 at the same time Thursday. The euro was at $1.0867-0867, up from $1.0855-0855, and at ¥132.36-38, down from ¥132.90-90.
The greenback continued to attract bids in New York overnight due to lingering effects of the U.S. Federal Reserve’s decision earlier this week to raise interest rates. But such purchases subsided in Tokyo morning transactions and the dollar moved aimlessly around ¥122.50 amid the dearth of fresh trading clues.
The U.S. currency showed volatile moves in the afternoon, prompted by the BOJ’s decision to adopt supplementary monetary easing measures such as additional purchases of exchange-traded funds, while keeping intact its monetary base expansion target under its “quantitative and qualitative” easing policy.
The dollar briefly soared above ¥123.50 but later dived below ¥122, in line with wild swings of the benchmark Nikkei stock average. After surging more than 500 points at one point, the Japanese stock index fell back into minus territory.
Investors, who fully checked details of the BOJ’s decision, found that “the steps are nothing but supplementary,” a currency broker said.
After somewhat stabilizing at levels around ¥122, the dollar came under renewed selling for position adjustments in late hours.
“The market initially had a knee-jerk reaction to the unexpected BOJ decision, but it looked less important after careful examination,” an official of a Japanese bank noted.
“The steps may be regarded as a failure for causing confusion in the market. Amid growing disappointment, the BOJ needs to explain well, otherwise it will be in trouble,” an official at a foreign exchange margin trading service firm said.