SINGAPORE, Jan 18 Reuters The yen dived sharply against major currencies on Wednesday after the Bank of Japan maintained ultralow interest rates, disappointing some investors who had hoped the central bank would relax its yield curve control policy further.

The central bank stunned the market last month by raising its cap on the 10year yield to 0.5 from 0.25, doubling the band it would permit above or below its target of zero. Since then, speculation had swirled that the BOJ could tweak its yield curve control YCC policy further or even scrap it.

At a twoday policy meeting, the BOJ kept intact its YCC targets, set at 0.1 for shortterm interest rates and around 0 for the 10year yield, by a unanimous vote. It also made no change to its guidance that allows the 10year bond yield to move 50 basis points either side of its 0 target.

As a result, the yen suffered broad losses, with the Asian currency down 2.3 against the dollar and was set for its worst day since March 2020.

The euro gained 2 to 141.1 yen and sterling rose by more than 2 to 160.71 yen. The Australian dollar gained 2.2 and Singapore dollar rose 1.9. The U.S. dollar was last up 2.42 at 131.22 yen.

The can has been kicked down the road and the attention will shift to the next meeting, said Moh Siong Sim, currency strategist at Bank of Singapore. It39;s a question of when, not if.

Some investors have been betting the BOJ will be forced to adjust, or even dismantle, YCC on the view the central bank cannot…