The yen suffered its biggest daily fall against the dollar since April on Tuesday after the Bank of Japan made only modest changes to its policy of holding down government bond yields.
The Japanese currency fell 1.7 per cent against the dollar to ¥151.60, its weakest level since October last year, and close to the point at which the central bank last intervened by spending a record ¥6.35tn ($43bn) to push the yen back up.
Some investors had suspected the BoJ would take a more definitive step towards closing the gap between borrowing costs in the US and Japan by abandoning its yield curve control altogether, as the yen tests multi-decade lows and inflation has persisted above the central bank’s target for the past 18 months. Instead, officials changed the 1 per cent limit on 10-year Japanese bond yields from a hard cap to a “reference point”.