The New Zealand dollar touched its lowest level against the Japanese yen in more than three years after the Bank of Japan failed to add further stimulus following a two-day meeting, sparking renewed interest in the yen.

The kiwi hit 72.28 yen overnight, the lowest level since January 2013, and was trading at 73.44 yen at 8am in Wellington, from 73.75 yen at 5pm yesterday. The local currency slipped to 70.40 US cents from 70.76 cents yesterday.

The Japanese yen soared and the country's 10-year bond yields touched historic lows after the Bank of Japan yesterday refrained from adding any additional stimulus despite weak inflation. The decision comes amid uncertainty about the global outlook after the Federal Reserve pulled back its expectations for future rate hikes over coming years and as Britain heads into a vote next week on whether to leave the European Union.

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Campaigns in the UK were suspended after a lawmaker was killed in an attack which may be linked with the referendum.


"The Japanese yen was the standout performer," Bank of New Zealand senior market strategist Kymberly Martin said in a note. "The Bank of Japan announced no new easing measures at its meeting yesterday that might have helped to dampen current market enthusiasm for the yen."

In New Zealand today, the BNZ-BusinessNZ Performance of Manufacturing Index is due for release at 10:30am and the ANZ-Roy Morgan consumer confidence survey is published at 1pm.

Prime Minister John Key is due to speak at Fieldays in Hamilton today.

The New Zealand dollar dropped to 49.53 British pence from 49.90 pence yesterday after the Bank of England kept monetary policy unchanged and said it had contingency measures ready if required following the UK's vote on EU membership next week.

The kiwi slipped to 95.55 Australian cents from 95.71 cents, weakened to 62.62 euro cents from 62.74 cents, and fell to 4.6393 yuan from 4.6520 yuan. The trade-weighted index declined to 75.22 from 75.49.