[TOKYO] The yen rose in Asia on Wednesday, buoyed by the Bank of Japan's decision to withhold fresh easing measures and projections of longer term growth.
The rise came despite the central bank's slashing of its outlook on inflation, as the vaunted 2.0 per cent target slid further out of reach.
The dollar slipped to 117.79 yen Wednesday afternoon, down from around 118.40 yen before the BoJ decision and from 118.80 yen in New York.
The euro, meanwhile, bought 136.25 yen and US$1.1569 against 137.24 yen and US$1.1553 in US trade.
The BoJ slashed its inflation outlook for the year from April 2015, as plunging oil prices dent its efforts to slay inflation, and decided against fresh easing measures as it wrapped up a two-day policy meeting.
Policymakers boosted their growth forecasts, however, saying the economy was rebounding.
"If the inflation forecast is cut, it would normally boost expectations for further monetary easing, sending the yen lower and stocks higher," Daisuke Uno, chief market strategist at Sumitomo Mitsui Banking Corp, told AFP.
But Uno said the bank's forecasts for growth and inflation were stronger for the year starting April 2016, while a sharp fall in the currency on Tuesday also left room for it to rise.
He added that some traders had expected additional easing, setting the stage for the yen's rise after the BoJ held steady.
Investors were now waiting for the European Central Bank's policy meeting on Thursday.
The ECB is set to decide whether to buy sovereign bonds under its quantitative easing programme in a bid to prop up the sagging 19-nation eurozone economy.
The prospect of such a move has hit the euro, which last week fell below US$1.1500 for the first time in more than 11 years before recovering slightly.
"Expectations are obviously coalescing around a big ECB sovereign QE programme, which is also adding to the dollar-positive mix," Richard Franulovich, chief currency strategist for the northern hemisphere at Westpac Banking Corp. in New York, told Bloomberg News.
Omer Esiner, chief market analyst at the currency brokerage Commonwealth Foreign Exchange Inc. in Washington, added: "The US economy, despite some of the macro headwinds, will likely continue to outpace most of the rest of the industrialised world." The Federal Reserve is expected to start raising interest rates in the middle of the year or earlier.
The Fed's policy path was underscored by the International Monetary Fund's latest economic growth estimates that showed weaker momentum in nearly all major economies, except the United States.
The IMF reduced its global economic growth forecast for this year to 3.5 per cent, and to 3.7 per cent in 2016. By contrast, the IMF raised the US growth estimate for this year to 3.6 per cent from 3.1 per cent.