Asia: Markets edge higher as BoJ keeps stimulus on hold

Asian equity markets edged higher on Wednesday, after the Bank of Japan opted against extending its stimulus measures, even though its inflation target is under threat amid slumping exports and a decline in oil prices.

Japan’s central bank decided by an 8 to 1 vote to leave its policy target unchanged and reiterated its pledge to increase base money at an annual pace of 80trn yen (£436bn) via asset purchases.

"Japan's economy continues to recover moderately although exports and production have been affected by the slowdown in emerging economies," the BOJ said in a statement.

The news, however, did not prevent the Nikkei Stock Average from edging higher for the day, as Japan’s main benchmark reversed earlier losses to climb 0.75%.

“With investors desperate for the global easy money policy song to play longer - in the US and the UK - and louder – the BoJ and the ECB - the delay is not worrying markets which have just increased the odds of recessionary signs forcing the central bank to act on 30 October,” said Michael Van Dulken, head of research at Accendo Markets.

With Chinese mainland markets closed until Thursday for a week-long bank holiday, Hong Kong’s Hang Seng rose 3.13% after Chinese authorities reported that foreign exchange reserves fell by a slower pace in September compared with a record $93.9bn decline in August.

“There are signs that the government's extraordinary scramble to stabilize the exchange rate has lessened the intensity of capital outflows,” said analysts at Market News International.

Elsewhere, Australia’s S&P/ASX 200 gained 0.59%, while South Korea’s Kospi rose 0.76%.

On the currencies front, the yen climbed 0.21% against the dollar, while the Indonesian rupiah traded at its strongest level since late August against the greenback. The Indonesian currency, which has lost 13% in the year-to-date, has rallied as much as 5% this week.

Meanwhile, the Australian dollar rose 0.66% against its American counterpart.