By Myra P. Saefong, MarketWatch
TOKYO (MarketWatch) -- The U.S. dollar fell against the Japanese yen and euro Friday afternoon in Asia, giving back some of the gains seen overnight after the Bank of Japan, as expected, left its call-rate target and economic assessment unchanged.
The Bank of Japan unanimously voted to keep its overnight call-rate target at 0.1%. It also emphasized the need to pull Japan out of deflation. See full BOJ story.
Following the announcement, the dollar (CUR_USDYEN 89.61, -0.22, -0.25%) was down against its Japanese counterpart, buying 89.34 yen, compared with 89.90 yen late Thursday in North American trading.
The euro (CUR_EURUSD 1.44, +0.00, +0.24%) was changing hands at $1.4396, up from $1.4340 late Thursday.
"There may have been some hesitancy to sell USD/JPY ahead of the BOJ meeting, in case they announced measures such as an increase in Rinban (outright Japanese government bond buying) operations -- which would have had a negative effect on the JPY," said Mitul Kotecha, head of global forex strategy at Calyon, in emailed comments.
But the meeting "delivered no surprises," he said.
In recent weeks, the greenback has strengthened overall, rallying to its highest level in more than three months on Thursday in North American trading. The dollar found support from a rush to safety spurred by concerns about Greece's debt payments and a reassessment of when the Federal Reserve could begin to tighten U.S. monetary policy. See Thursday's Currencies column.
"The [U.S. dollar] is in a win-win situation at present," Kotecha said in a note to clients Friday ahead of the BOJ statement. "Good economic data in the U.S. helps to advance expectations of U.S. monetary tightening, lending the USD support, regardless of the positive impact on risk appetite."
And "bad economic news is also supporting the USD as it leads to higher risk aversion," he said. "Either way the USD has surged over the past few weeks, appreciating by close to 5% since its low on 25 November."
