The dollar briefly plunged below ¥113 in Tokyo trading on Thursday, dampened by less-hawkish-than-expected interest rate projections by the U.S. Federal Reserve.
At 5 p.m., the dollar stood at ¥113.23-23, down from ¥114.69-69 at the same time Wednesday. The euro was at $1.0725-0725, up from $1.0637-0637, and at ¥121.44-45, down from ¥122.00-00.
Following the end of a two-day Federal Open Market Committee meeting, the Fed announced a decision to raise its policy rate target, as widely expected.
The Fed also released the FOMC members’ latest interest rate forecasts, which suggested the U.S. central bank is now expected to carry out two more interest rate hikes during this year for a total of three increases, unchanged from the previous outlook.
The rate forecasts “triggered selling on disappointment, as an increasing number of market participants had bet on a total of four rate hikes this year,” an official at a major Japanese bank said.
After sliding to near ¥113 in overseas trading overnight, the dollar drifted between ¥113 and ¥113.50 before temporarily slipping below the ¥113 line in late Tokyo trading due to selling by European players.
The Bank of Japan’s decision to keep monetary policy unchanged, announced shortly before noon, somewhat prompted selling of the dollar against the yen, but its impact was limited.
“After selling on the FOMC outcome ran its course, the currency market was left devoid of incentives, with the dollar’s movements basically limited to ¥113.00-50,” a foreign exchange broker said.