Japan's yen hits fresh 34-year low after BOJ holds interest rates
Dollar/yen hits 156
Bank of Japan leaves short-term rates near zero
Updates prices
By Tom Westbrook
SINGAPORE, April 26 (Reuters) - The yen hit its weakest level inthree decades against the U.S. dollar after the Bank of Japan left interest rates on hold on Friday, leaving traders on edge about the risk of official intervention.
The yen JPY=EBS was 0.3% weaker at156.1 per dollar shortlyafter the BOJ's announcement, its weakest since 1990.
The yen also nudged down to its weakest almost 16 years at 167.38 per euro EURJPY=R and its weakest in nearly a decade on the Australian dollar AUDJPY=R.
The Bank of Japan left its short-term interest rate target at 0-0.1% and made only small upward adjustments in its inflation forecast. Markets had not expected a policy shift but investors interpreted the decision as conservative as it did not offer a projection of Japan's path to policy normalisation.
"The currency takeaway is certainly disappointment from the lack of guidance coming from the Bank," said National Australia Bank strategist Rodrigo Catril.
"To me the ... market is telling us it believes that the BOJ policy is too loose and hence why the currency is so weak," he said.
"The Bank has the ability to do something about that by changing its policy, and if it's not going to change the policy, then we shouldn't expect the yen to strengthen."
The focusnow falls on Governor Kazuo Ueda's tone and outlook at his news conference at 3:30 p.m.in Tokyo (0630 GMT) and whether the yen's weakness prompts an official response.
"If dollar/yen keeps going up, (intervention) wouldn't surprise ... given you've had a lot of yen weakness and a lot of very public pushback from Japanese officials," said Joe Capurso, head of international economics at the Commonwealth Bank of Australia.
"The market's not really taken it seriously, so at some point they'll draw a line in the sand and say enough is enough."
The yen's 9.7%drop against the dollar this year is the largest fall of any G10 currency, driven mostly by the wide gap between U.S. and Japanese government bond yields, which is more than 375 basis points at the 10-year tenor JP10US10=RR.
The yen has slipped past levels at 152 and 155 to the dollar where traders had been wary of intervention. Japanese Finance Minister Shunichi Suzuki said on Friday he was closely watching currency moves and prepared to take full steps in response.
Elsewhere the dollar had dipped on softer-than-expected U.S. growth data, even as Treasury yields rose on a hotter-than-expected inflation indicator.
The euro EUR=EBS rose 0.3% on Thursday to a two-week high of $1.0728 following data showing the U.S. had grown at its slowest pace in nearly two years in the first quarter. The annualised rate of 1.6% missed economist forecasts for 2.4%.
The Australian dollar, which has been boosted by a hotter-than-expected inflation reading this week, briefly topped its 200-day moving average to hit $0.6539, before settling around $0.6522 in Asia trade on Friday. AUD/
Sterling GBP=D3 rose 0.4% on Thursday and was last at $1.2503. The New Zealand dollar NZD=D3 was a touch firmer in Asia morning trade at $0.5960 and has gained in the previous four sessions.
World FX rates https://tmsnrt.rs/2RBWI5E
BOJ operations, yields and yen https://tmsnrt.rs/3Uz9OmY
Reporting by Tom Westbrook; Editing by Christopher Cushing and Kim Coghill
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