However, the central bank maintained its base money target at ¥80 trillion yen, kept its existing pace of purchasing other assets and left interest rates unchanged at 0.1%, disappointing investors who expected a more aggressive policy change.
“The BOJ did not live up to expectations,” Norio Miyagawa, senior economist at Mizuho Securities, told Reuters. “Increasing ETF purchases makes no contribution to achieving 2 percent inflation. The BOJ won’t admit it, but it has reached the limits of quantitative easing and negative rates.”
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Consequently, currency traders rushed into the Japanese yen, lowering expectations of looser policy measures that would devalue the JPY.
On Friday, the CurrencyShares Japanese Yen Trust (NYSEArca: FXY) jumped 3.0%, with the yen strengthening to ¥102.15 against the U.S. dollar.
iShares MSCI Japan ETF