The Japanese yen surged to its strongest level against the dollar in two years after the Bank of Japan (BOJ) held off from tinkering with monetary policy until after the UK's EU referendum.
The yen was up by 1.8 per cent against the US dollar this afternoon, trading at ¥104, as investors flocked to the apparently safe currency after Brexit fears continued to stalk financial markets. This was the strongest level since August 2014 and will create even more headaches for the BOJ in their bid to stoke inflation by, implicitly, weakening the currency.
The BoJ was expected to further loosen policy at its meeting this morning, but instead opted to wait until the implications of the EU vote have played out. The Bank is believed to want to keep some gas in the tank so it can respond to any financial turmoil if the UK votes to leave with additional monetary stimulus, rather than push the pedal to the metal before 23 June.
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Governor Haruhiko Kuroda indicated he was watching events in the UK intensely ahead of the vote as the list of central bankers worried about the referendum continues to grow after the latest round of monetary policy meetings.
A stronger yen is bad for the country's inflation prospects, but the currency was helped even further on its climb by the continued fallout from a dovish Federal Reserve meeting which pushed the greenback down.