The dollar slipped against the yen on Friday after a set of stimulus measures the Bank of Japan unveiled were deemed too modest to drive the greenback higher.

The BOJ on Friday said after its policy meeting that it would expand the type of assets it purchases, sending the dollar briefly soaring versus the yen.

Base money target

But the greenback slid as it became clear that the central bank would not expand its base money target under its massive stimulus programme.

The dollar initially rose to 123.59 after the BOJ announcement, but was last down 0.3 per cent at 122.145 yen.

The BOJ was widely expected to stand pat on monetary policy and the market was caught flat-footed.

“I don't think many people were expecting the BOJ to make a move right after the FOMC, so the timing of the announcement came as a surprise,’’ said Ayako Sera, senior market economist at Sumitomo Mitsui Trust in Tokyo.

“But upon closer inspection the contents show that the BOJ merely fine-tuned its policy, which is why the dollar came down.’’

The central bank kept intact its policy target of increasing base money - or cash and deposits in circulation - at an annual pace of ¥80 trillion ($655 billion) via aggressive buying of government bonds, exchange-traded funds (ETFs) and trust funds investing in property.

In addition to such purchases, the BOJ has decided to set aside ¥300 billion to buy ETFs that specifically target the shares of companies actively pursuing capital expenditure. It will also extend the maturity of JGBs it buys to 12 years from 10 years next year.

The US dollar index slipped 0.4 per cent to 98.910 after hitting 99.294 overnight, its highest in two weeks. The index posted a 1.2 per cent gain on Thursday — its biggest rise in over a month. The greenback advanced broadly after the Fed on Wednesday by lifting its benchmark rate off zero.

The euro was up 0.2 per cent at $1.0846, pulling away from a 10-day low of $1.0802 hit overnight.

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