The yen rose more than 1% against all 16 of its major peers after the Bank of Japan refrained from introducing additional stimulus measures that tend to weaken a currency.
The Japanese currency snapped a two-day decline against the dollar as the BOJ held back from extending the maturity of loans to banks. European stocks declined along with Japan’s Nikkei 225 Stock Average. Australia’s dollar dropped to an almost three- year low after data showed home-loan approvals expanded by less than economists forecast. Malaysia’s ringgit slid to a 10-month low versus the dollar.
“Most investors didn’t expect any action, but a handful of players thought officials might have done something to put a lid on rising bond yields,” Joe Manimbo, a market analyst at Western Union Business Solutions, a unit of Western Union Co., said in a telephone interview from Washington. “Since that didn’t materialize, we’ve seen a sharp selloff in the Nikkei. They didn’t do much to instill optimism that Japan is leaning toward more action to settle markets.”
The yen strengthened 1.9% to 96.92 per dollar at 8:46 a.m. New York time after rising as much as 2.3%. It gained 2% to 128.30 per euro after advancing the most since April 15. Europe’s shared currency lost 0.1% to $1.3243.
The Nikkei decreased 1.5%. JPMorgan Chase & Co.’s G- 7 Volatility Index, based on currency option premiums, reached 10.50%. It touched 10.62% on June 7, the highest level since June 2012.
The BOJ kept unchanged its plan for a 60 trillion-yen to 70 trillion-yen annual increase in monetary base, the central bank said after a two-day meeting ended today. All but three of 23 analysts in a Bloomberg News survey either forecast that the BOJ would approve two-year or longer loan operations at the policy meeting or said such a move was possible.
BOJ governor Haruhiko Kuroda said after the meeting that the central bank would discuss longer fund operations when needed.
“The market is expecting too much too quickly from both the Bank of Japan and the government,” said Peter Frank, global head of currency strategy at Banco Bilbao Vizcaya Argentaria SA in London. “We are seeing a higher yen with the market being marginally disappointed. There’s a lack of new newsflow.”
The yield on Japan’s benchmark 10-year bond climbed five basis points to 0.89%. It has swung from an all-time low of 0.315% to as much as 1% since the BOJ announced in April a plan to double monthly bond purchases to more than 7 trillion yen.
The yen has climbed 5.9% in the past month, the best performer among 10 developed-market currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar gained 0.5% and the euro has risen 2.9%.
Australia’s dollar slid for a third day against the greenback as the nation’s statistics bureau said April home-loan approvals rose 0.8%, versus the 2% advance estimated by economists and a revised 4.8% gain in March.
“Housing is the one area most likely to make up for the mining investment downturn, and it’s disappointed,” said Joseph Capurso, a Sydney-based foreign-exchange strategist at Commonwealth Bank of Australia. “You’ve got to say that the Aussie’s going to keep on falling.”
The so-called Aussie fell 1.3% to 93.39 U.S. cents after reaching 93.26, the weakest since September 2010. It slid 3.2% to 90.52 yen after touching 90.18, the weakest since Jan. 2.
The peso fell for a fifth day against the dollar after official figures showed overseas shipments from the Philippines slipped 12.8% in April. That compares with a 5.3% estimate in a Bloomberg survey of economists. The jobless rate climbed to the highest in three years.
The ringgit weakened on speculation the Federal Reserve will cut its monetary stimulus, slowing inflows into emerging- market assets.
The Peso fell 0.5% to 43.085 per dollar. Malaysia’s currency depreciated 0.7% to 3.15 per dollar, according to data compiled by Bloomberg. It touched 3.1615, the weakest level since July 27.