Tokyo -The dollar was under pressure against the yen in Asia on Wednesday morning after the Bank of Japan (BoJ) held off launching fresh easing measures following a closely-watched policy meeting.
The greenback fetched 96.55 yen in Tokyo morning trade, after it sank to 96.01 yen in New York on the back of the BoJ decision, but it was still well down from the 98 yen level on Tuesday in Tokyo.
Easing measures tend to weaken the yen and markets were taken by surprise after Japanese policymakers opted to stand pat after announcing an easing programme in April that includes a huge asset-buying plan and a doubling of the country's money supply in a bid to stoke growth.
The BoJ on Tuesday said the world's third-largest economy was "picking up".
"The Bank of Japan's policy board was content simply to upgrade its economic assessment," said London-based Capital Economics.
"This disappointed those hoping for further monetary easing in response to the recent volatility in financial markets."
Worries about turmoil in global markets and a winding down of central bank policy measures pushed traders toward the safe-haven yen, dealers said, as Tokyo's Nikkei 225 index sank 1.84% by the lunch break following a tumble on Wall Street.
Last week, the European Central Bank and Bank of England stood pat after monthly policy meetings, as markets look for clues about when the US Federal Reserve may taper off its $85-billion-a-month bond buying programme, known as quantitative easing, which was designed to stoke the world's biggest economy.
In Tokyo, covering short positions on dollar bets and buying from importers who pay for overseas goods with dollars supported the US unit, but the dollar could be set for another fall, said a senior trader at a trust bank.
"Although the dollar has recovered moderately amid the absence of fresh news, it technically looks set to fall further toward 95 yen," the trader told Dow Jones Newswires.
The euro meanwhile also strengthened on the yen at 128.50 yen, from 127.81 yen the previous day, while the single currency was nearly flat on the dollar at $1.3309 from $1.3311.