Tokyo - The dollar rose sharply against the yen in Tokyo Tuesday after the Bank of Japan announced further monetary easing measures to help the economy fight deflation.
Japan's central bank announced on Tuesday afternoon that it lowered its key rate to between zero and 0.1% in a surprise move to help safeguard a fragile recovery, its first interest rate move since December 2008.
It also announced further monetary easing measures in a bid to combat the harmful strength of the yen and beat persistent deflation.
The dollar rebounded sharply to ¥83.99 at one point, up from ¥83.38 in New York on Monday. The euro rose to ¥114.46 from ¥113.86 earlier.
"The central bank decided on easing measures in the scale and rate much bigger than the market had expected," said Hideaki Inoue, chief forex manager at Mitsubishi UFJ Trust and Banking Corp.
But he also said the dollar was still capped as the market is also looking to an expected easing of monetary policy by the US Federal Reserve next month.
The benchmark Nikkei share index also jumped by around 1.0% on the surprise decision.