Yen falls after BOJ adheres to its ultra-loose monetary policy

Yen fell broadly on Tuesday after the Bank of Japan kept its ultra-loose monetary policy unchanged and maintained its guidance for the future in an expected decision at the end of its two-day meeting.

After the decision, the yen fell more than 0.6% 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% 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% to $0.6719, after reaching a peak at $0.6736 in the previous session, recording its highest levels since July 31.

The New Zealand dollar also rose 0.25% to $0.62275, which is not far from Monday’s high level of $0.6250.

Minutes from the Reserve Bank of Australia’s December monetary policy meeting released on Tuesday showed the central bank considered raising interest rates, but decided there were enough encouraging signs on inflation to pause while awaiting more data.