The dollar traded above ¥120.50 in Tokyo trading late Friday after briefly jumping above ¥121, powered by the Bank of Japan’s unexpected decision to introduce a negative interest rate policy.
The dollar approached ¥121.40 in the early afternoon, with market players rushing to buy the U.S. currency immediately after the announcement of the BOJ’s decision on the additional monetary easing step at a two-day monetary policy meeting.
At 5 p.m., the dollar stood at ¥120.63-64, up from ¥118.77-78 at the same time Thursday. The euro was at $1.0896-0897, up from $1.0875-0875, and at ¥131.46-47, up from ¥129.18-20.
After moving around ¥118.80 in early trading, the dollar rose to near ¥119 thanks to position-adjustment buying, but came under selling pressure as Tokyo stocks turned lower.
The dollar later drew renewed demand and topped ¥121 following the announcement of the BOJ’s additional monetary easing measure, aimed at achieving its 2 percent inflation target at an early date, market sources said.
“The negative interest rate policy was a positive surprise,” an official at a Japanese bank said.
Beginning on Feb. 16, the BOJ will apply an interest rate of minus 0.1 percent to some of the current account deposits held by financial institutions at the central bank, against 0.1 percent at present.
Even after giving up some of its gains, the dollar stayed solid mostly above ¥120.50 in late hours, supported by the BOJ action, market sources said.