The yen tumbled to a one-week low following
the decision, and was last more than 0.7% lower at 134.93 per
U.S. dollar.
"The hopes of a policy change has been somewhat dampened by
the review," said Moh Siong Sim, a currency strategist at Bank
of Singapore, adding that the likely length of the review might
have dampened hopes of an imminent move in the policy setting.
"For now, the outcome is read as a dovish outcome."
Earlier on Friday, however, government data showed core
consumer prices in Japan's capital, Tokyo, rose 3.5% in April
from a year earlier, beating market forecasts in a sign of
broadening inflationary pressure in the world's third-largest
economy.
"This puts pressure on the BOJ, they might do something in
the near future," said Tina Teng, market analyst at CMC Markets.
In the wider currency market, the U.S. dollar rose broadly
on Friday, drawing support from data pointing to still-sticky
inflation in the United States, which reinforced expectations
for a 25-basis-point rate hike at next week's FOMC meeting. .
Against the greenback, sterling fell 0.14% to
$1.2483, while the Aussie edged 0.29% lower to $0.6611.
The U.S. dollar index gained 0.22% to 101.67, rebounding
from a near two-week low struck on Wednesday.
However, the index remained on track for a monthly loss of
close to 1%, after having fallen about 2.3% in March.
Data released on Thursday showed that while U.S. economic
growth slowed more than expected in the first quarter, consumer
spending, which was accompanied by a rise in inflation,
accelerated.
A measure of inflation in the economy, the price index for
gross domestic purchases, rose 3.8% in the first quarter,
slowing from 3.6% in the fourth quarter, while the core PCE
price index rose 4.9% in the first quarter, accelerating from
4.4% in the fourth quarter.
"The Fed is widely expected to hike again next week but with
inflation remaining sticky, we expect the Fed to stay on hold
for the remainder of the year, dashing hopes of a policy pivot
in (the second half)," said analysts at Societe Generale.
Elsewhere, the euro fell 0.1% to $1.1016, but
remained near its recent one-year high. The common currency was
eyeing a monthly gain of more than 1.5%.
The euro has been buoyed by expectations that the European
Central Bank still has further to go in raising interest rates,
analysts said.
"Investors favour currencies that can offer both an ongoing
domestic tightening cycle and still some room for a hawkish
surprise at the coming meetings," said ING analysts.
"In that sense, the euro is one of the very few currencies
that can offer this combination at the moment."
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World FX rates ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Reporting by Rae Wee; Editing by Lincoln Feast & Simon
Cameron-Moore)
By Rae Wee
SINGAPORE, April 28 (Reuters) - The Japanese yen fell on
Friday after the Bank of Japan (BOJ) left its ultra-easy
monetary policy unchanged even as it scrapped a pledge to keep
interest rates low, while the U.S. dollar was on track for a
second straight monthly loss.
The outcome of the new BOJ Governor Kazuo Ueda's first
policy meeting was closely watched. As expected, the BOJ said it
would maintain ultra-low interest rates, and unanimously decided
to make no changes to its yield curve control (YCC) policy.
However, the central bank removed a pledge to keep interest
rates at "current or lower levels" and said it would "conduct a
broad-perspective review of monetary policy".
That review is expected to last around one to one-and-a-half
years and would lay the groundwork for Ueda to gradually phase
out his predecessor's massive stimulus programme..
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