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Tokyo -The yen slipped in Asian trading on Friday afternoon after a brief surge on the Bank of Japan's (BoJ) decision to hold off fresh easing measures, as markets bet that it would be forced to act sooner than later.
Speculation had been building that the BoJ would unleash another wave of stimulus - which tends to weaken the yen - in a bid to prop up an economy teetering on the edge of recession.
"Some players who anticipated fresh measures jumped on yen-buying sentiment following the decision," said Yosuke Hosokawa, head of the forex sales team at Sumitomo Mitsui Trust Bank.
But the yen's rally quickly fizzled.
"The no move was probably the more favoured expectation so the rally is muted," Greg Gibbs, director of Amplifying Global FX Capital, told Bloomberg News.
"It's not nearly as much fun as it would have been if they eased policy, traders will put their guns away and settle back into the saloon for (the) afternoon."
Japan posted weak inflation and household spending figures earlier on Friday that had pointed to the BoJ possibly unleashing another round of easing to counter the downturn.
The dollar, which had slumped as low as ¥120.44 in the wake of the decision, was at ¥121.35 in the afternoon, up from ¥121.10 in New York late on Thursday.
The euro, which also slumped after the BoJ announcement, bought ¥133.21 against ¥132.96 in US trade.
Focus was now on a press briefing by BoJ chief Haruhiko Kuroda and the bank's latest growth and inflation projections, as it is widely expected to lower its forecasts.
Many expect the BoJ will be forced to launch more easing sooner than later, possibly after third-quarter GDP figures next month.
"Pressure will only mount for more easing," Masamichi Adachi, an economist at JPMorgan Chase and a former BoJ official, told Bloomberg News.
"The economy is clearly not strong enough to suggest two percent inflation is under way," he added, referring to the bank's price target.
The BoJ's ¥80trn ($665bn) annual asset-buying scheme - similar to the Federal Reserve's quantitative easing scheme to pump money into the economy - is a key pillar of Prime Minister Shinzo Abe's growth blitz, dubbed "Abenomics".
The programme, launched more than two years ago, has faltered after initially setting off a stock market rally and weakening the yen, giving a lift to corporate profits.
