Dollar seesaws against yen

TOKYO: The US dollar seesawed against the Japanese yen on Tuesday after the Bank of Japan made small tweaks to its policy rather than more drastic changes that some traders had expected.

The dollar briefly dropped to 110.75 yen before jumping to a one-week high of 111.44 yen, gaining about 0.3 percent on the day, after the BOJ took measures to keep its massive stimulus programme flexible.

"The price action was pretty active. It has been a while since dollar-yen has moved in these sorts of ways," said Bart Wakabayashi, Tokyo branch manager at State Street Bank.

The greenback had pared some of its gains about two hours after the decision, trading 0.2 percent higher at 111.30 yen.

Wakabayashi said the BoJ seemed to signal to markets that it is ready to react to moves in 10-year government bonds while holding off from setting specific targets.

"I think that was the yen selling trigger," Wakabayashi said. "The underlying feeling was there would be more of a specific announcement, whether that would be numerical, a date, or whatever issue they were addressing," he said.

The BOJ pledged on Tuesday to maintain its short-term interest rate target at minus 0.1 percent and decided to guide 10-year JGB yields around zero percent.