Investing.com –The Japanese yen fell sharply on Friday after the Bank of Japan largely maintained its dovish stance, while broader Asian currencies also came under pressure from renewed fears of more interest rate hikes by the Federal Reserve.
The was the worst-performing Asian currency for the day, down 0.7% to a one-week low after the Bank of Japan and said that it will policies.
rallied after the move, and were close to testing the upper 0.5% limit, as the BOJ said it will “patiently” maintain its accommodative policies for the time being.
But the bank also hiked its inflation forecast for fiscal 2023, while separate data showed grew more than expected in April, moving back towards 40-year highs. Rising inflation could pressure the BOJ into potentially tightening policy later this year, although the bank quashed such expectations by announcing a year-long review into monetary policy.
Broader Asian currencies moved in a flat-to-low range on Friday, but were set to end the week lower as investors positioned for a widely expected by the Federal Reserve next week.
The rose 0.2%, recovering slightly from an over one-month low hit earlier in the week, while the added 0.1% on data that showed fell less than expected in March.
The fell 0.2% as a Reuters poll showed that the is widely expected to hold interest rates steady next week.
The and rose about 0.2% each, but were headed for weekly losses following weak signals on the U.S. economy.
Data on Thursday showed that the world’s largest economy in the first quarter, amid pressure from high inflation and interest rates. The dollar was largely flat after the data.
But still rallied in overnight trade as other readings pointed to higher-than-expected in the first quarter, while also unexpectedly fell.
Signs of sticky inflation, coupled with strength in the labor market, give the Fed more impetus to hike interest rates. Markets are now uncertain over the path of monetary policy after May’s meeting, given that the Fed has offered no signals that it plans to taper its hawkish stance.
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