Dollar gains after BOJ changes policy framework

The dollar jumped on Wednesday after the Bank of Japan altered its policy framework, and investors bought back the US currency ahead of the outcome of the Federal Reserve's policy meeting later in the session.

Japan's central bank, overhauling its massive stimulus programme, decided to scrap its focus on monetary base and set targets for long-term rates.

The BOJ maintained the 0.1 percent negative interest rate it applies to some of the excess reserves that financial institutions park with the central bank.

But it abandoned its base money target and instead set a "yield curve control," under which it will buy long-term government bonds to keep 10-year bond yields around current levels of zero percent. The dollar was up 0.8 percent at 102.54 yen, after rising to a nearly one-week high of 102.67.

"The monetary base was abandoned, which could be supportive for the dollar, overall," said Kaneo Ogino, director at foreign exchange research firm Global-info Co in Tokyo. "Many people expected the BOJ not to take any action at all, and the yen to strengthen, so we now see many people buying the dollar back," he said.

The euro surged 0.7 percent to 114.17 yen after earlier dropping as low as 112.50, its lowest since Aug. 16.

Against the dollar, the European unit was down 0.2 percent at $1.1133.

Japanese data released earlier on Wednesday showed exports fell 9.6 percent in August from a year earlier, posting an 11th straight month of decline.