The yen skidded by more than 1 percent to a 2-1/2-week low against the dollar on Friday after a report said that the Bank of Japan is considering expanding its negative rate policy to bank loans and could cut rates further.
The BOJ could consider the new step if policymakers decide to lower the negative 0.1 percent interest rate applied to some bank reserves parked with the central bank, Bloomberg reported on its website.
The yen has gained about 10 percent against the dollar JPY= since the BOJ announced that it was adding negative interest rates to its stimulus program at the end of January, a step that would usually be expected to weaken a currency.
However, a combination of factors have pushed the yen higher: risk-averse markets stoking demand for safe havens, rising real interest rates in Japan and a fall in the dollar because of a push-back of U.S. rate expectations.
On Friday, though, the yen weakened by as much as 1.2 percent to 110.76 per dollar, heading toward its worst week in 12.
The BOJ’s next two-day policy review ends on April 28. Read more