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September 24, 2017

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Yen tumbles after BOJ tweaks lending scheme

TOKYO--The yen tumbled in Asia on Tuesday after the Bank of Japan (BoJ) held off expanding its asset-buying program but said it would boost some lending schemes to stimulate borrowing.

The greenback jumped to 102.51 yen, having traded at around 101.95 yen before the BoJ decision, sending Tokyo's headline Nikkei stock index soaring 3.13 percent.

The dollar was trading at 101.81 yen in London late Monday.

The euro also jumped against the Japanese currency at 140.63 yen from 139.42 yen, while it rose to US$1.3714 from US$1.3695 in London.

The greenback's jump came in tandem with a rally for the Nikkei, which may have taken is cue from the BoJ move to inflate the size of two lending programs, said Junichi Ishikawa, market analyst at IG Securities.

Wrapping up a two-day policy meeting, the BoJ said it would keep its massive easing program in place, in line with expectations. However, it also decided to double the sum of loan schemes to banks in a bid to stimulate lending to firms and to finance growth-stoking projects such as environmental research and natural resources development.

Analysts are widely predicting the BoJ would have to expand its asset-buying plan later this year to counter any slowdown from a sales tax hike in April. Further easing would be likely to weigh on the yen, as the U.S. Federal Reserve rolls back on its own stimulus program.

The dollar rose against Asia-Pacific currencies.

It strengthened to 11,843 rupiah from 11,692 rupiah on Monday, to 44.55 Philippine pesos from 44.54 pesos and to 32.41 Thai baht from 32.35 baht.

The dollar also rose to SG$1.2613 from SG$1.2597, to 1,065.73 South Korean won from 1,061.83 won and to 62.15 Indian rupees from 62.06 rupees.

The Australian dollar weakened to 90.42 U.S. cents from 90.49 cents, while the Chinese yuan fetched 16.90 yen against 16.72 yen.

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