By Kevin Buckland
TOKYO (Reuters) – The yen surged against the dollar on Tuesday after the Bank of Japan said it would review its yield curve control policy and widened the trading band for the 10-year government bond yield in an unexpected hawkish tweak.
Japan’s central bank said the policy board decided unanimously to review the operation of its yield curve control, which pins short-term yields at -0.1% and the long-term yield around zero, amid a decline in market function.
While it kept broad policy settings unchanged, it widened the allowable band for the 10-year JGB yield to 50 basis points either side of zero, from 25 basis points.
The dollar tumbled as much as 2.78% to 133.11 yen, a level last seen on Aug. 16.
The dollar had been slightly stronger versus the yen ahead of the policy announcement.
Eyes will now be trained on BOJ Governor Haruhiko Kuroda’s media briefing later in the day for additional hints about a pivot away from ultra-easy policy.
Most BOJ watchers had expected no change in policy until his 10-year term ends at the end of March.
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Currency bid prices at 0316 GMT
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar
$1.0642 $1.0608 +0.32% -6.39% +1.0653 +1.0598
Dollar/Yen
133.1600 136.9600 -2.71% +15.85% +137.4600 +133.2500
Euro/Yen
141.74 145.20 -2.38% +8.76% +145.8200 +141.7300
Dollar/Swiss
0.9256 0.9286 -0.30% +1.49% +0.9308 +0.9257
Sterling/Dollar
1.2206 1.2146 +0.53% -9.72% +1.2222 +1.2142
Dollar/Canadian
1.3627 1.3654 -0.16% +7.82% +1.3657 +1.3616
Aussie/Dollar
0.6724 0.6699 +0.38% -7.50% +0.6743 +0.6687
NZ
Dollar/Dollar 0.6384 0.6364 +0.30% -6.74% +0.6395 +0.6333
All spots
Tokyo spots
Europe spots
Volatilities
Tokyo Forex market info from BOJ
(Reporting by Kevin Buckland; Editing by Sam Holmes and Muralikumar Anantharaman)
