The greenback has rallied around two percent against the yen from lows touched before the Federal Reserve on Wednesday lifted borrowing costs and indicated further tightening of monetary policy.
The central bank also outlined plans to suck cash out of the financial system by scaling back the bonds on its balance sheet.
By the break, Tokyo’s Nikkei index was up 0.5 percent, with traders awaiting the conclusion of the Bank of Japan’s latest board meeting. While it is not expected to change tack, its statement and a news conference by governor Haruhiko Kurada will be pored over for forward guidance.
Hong Kong added 0.4 percent a day after tumbling more than one percent, while Sydney and Singapore each put on 0.3 percent. Wellington and Taipei also rose but Seoul dipped on 0.1 percent and Shanghai was off 0.2 percent.
The pound extended gains after surging on Thursday in response to the surprise news that three out of the Bank of England’s eight policy board members had voted for a rate hike as inflation continues to rise on the back of increasing import costs.
Sterling had fallen below $1.270 before the decision but bounced to as high as $1.2795 afterwards before settling slightly lower. However, it remains pressured by political uncertainty following last week’s election that saw the ruling Conservatives of Prime Minister Theresa May lose their majority.
Analysts said the post financial crisis era of ultra-low rates and easy money was coming to an end as central banks around the world began to tighten the belt.
“The markets continue to digest the latest signals from the Federal Reserve Board who are now actively discussing how and when to pare back the balance sheet,” said Stephen Innes, senior trader at OANDA, in a note.
“But just as significantly the investors are now coming to grips with the notion that perpetual global central bank gravy train may be coming to an end.”