- BOJ raises rates as expected, Ueda's speech offers few hints
- Yen falls broadly, hits record low against euro
- Euro under pressure on lack of ECB outlook
- BoE cut much closer run than market expected; sterling steady
SINGAPORE, Dec 19 (Reuters) - The yen weakened in volatile trade on Friday after the Bank of Japan delivered a widely expected rate hike, while its governor offered few hints on the timing of future increases even as he left the door open to further tightening.
The yen initially fell against the dollar after the BOJ raised its policy rate to 0.75% from 0.5% in a move that had been well telegraphed by policymakers, prompting traders to sell the currency on the fact.
Losses in the Japanese currency extended following BOJ Governor Kazuo Ueda's post-meeting press conference, where he remained vague on the exact timing and pace of future interest rate hikes. It was last 0.6% weaker at 156.53 per dollar.
The euro rose to a record high of 183.25 yen . Sterling gained 0.52% to 209.16 yen .
In Friday's statement, the BOJ maintained its view that underlying inflation will converge around its 2% target in the latter half of its three-year projection period through fiscal 2027.
But hawkish board members Hajime Takata and Naoki Tamura dissented to the view. Takata said underlying inflation has already achieved the target, while Tamura said it would do so as soon as the middle of the three-year projection period.
"There seems to be a conversation going on and the reaction we're seeing in the market, in my belief, is about future moves from the BOJ...(they're) not dead set on another hike," said Bart Wakabayashi, Tokyo branch manager at State Street, in the wake of the BOJ decision earlier on Friday.
"I do believe there's consensus that 1% or 1.25% is sort of the neutral rate at the moment, it just seems like it's going to be a bit of a steeper hill for the BOJ to get there."
The BOJ again noted real rates were at "significantly" low levels even after the hike, and pledged to continue tightening should the economy and inflation pan out as forecast.
EURO DIPS AS LAGARDE REBUFFS HAWKS
Overnight, the dollar had briefly weakened following a sharp and unexpected fall in U.S. inflation, but investors were not sure how far to trust the data since collection was interrupted by the U.S. government shutdown, and the move soon retraced.
Sterling round-tripped to sit at $1.3374 after the Bank of England cut interest rates to 3.75%, as expected, but the decision was closer-run than the market had anticipated, which may limit the room for further easing.
The euro was flat at $1.1719 in Asia, weighed down because European Central Bank chief Christine Lagarde offered no forward guidance and said all options were on the table, pushing back against more hawkish members.
"In recent weeks, hawkish commentary from ECB Executive Board Member Schnabel had driven a shift in the market's assessment of the risks to policy moving forward," ANZ analysts said in a note to clients. "But (the) balanced tone signals Schnabel’s view that the next move is more likely to be a hike is not broadly shared across the council."
The ECB left its policy rate on hold at 2%, as expected.
On the political front, European Union leaders decided on Friday to borrow cash to fund Ukraine's defence against Russia for the next two years rather than use frozen Russian assets, sidestepping divisions over an unprecedented plan to finance Kyiv with Russian sovereign cash.
NORWAY, SWEDEN HOLD RATES
Norway's crown weakened slightly to 10.18 per dollar after the central bank left rates on hold at 4% and indicated it was in no hurry to cut. There was not much movement in the Swedish crown after rates were left on hold, as expected.
The Australian dollar eased 0.2% to $0.6601, while the New Zealand dollar fell 0.5% to $0.5748.
China's yuan was firm in onshore trade, hovering near a more than one-year high hit on Thursday. The dollar index was up 0.2% at 98.64.
Cryptocurrencies bounced on Friday, with bitcoin up 2.5% at $87,752.22, while ether rose more than 4% to $2,951.26.
Reporting by Tom Westbrook; Editing by Jamie Freed and Jacqueline Wong
Source: Reuters