The Japanese yen surged to its highest level against the dollar since August 2014 following the Bank of Japan’s policy decision to refrain from more stimulus measures.
One of the reasons cited for inaction was the uncertainty of the outcome of next week’s UK referendum on EU membership on June 23rd.
The yen rose nearly 2 percent versus the US dollar after the Bank of Japan’s decision, which pushed down USDJPY to 103.55 yen.
A strengthening yen has become a major headache for the central bank, as it hampers the BOJ’s efforts to spur inflation and spark growth, while making Japanese exports less competitive abroad.
But concern about Brexit encouraged some BOJ policy board members to stand pat, according to people familiar with the central bank’s thinking. They worried that the impact of any further BOJ easing would be wiped out if a U.K.
vote for a so-called Brexit roiled global financial markets, leaving the central bank short of ammunition to respond to that turbulence, the people said.
The BOJ’s decision came just hours after the Federal Reserve’s decision not to change monetary policy and it left interest rates on hold, also partly because of concerns of Brexit.
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