The Japanese Yen declined to more than a one-month low on Friday following the Bank of Japan's decision to keep interest rates unchanged and announce a reduction in bond purchases.

Meanwhile, the Euro, caught in political upheaval, was on track for its largest weekly decline in two months.

At the end of its policy meeting, the Bank of Japan (BOJ) said it would still purchase government bonds at the current pace for now, and outline details of the tapering plan at next month’s policy meeting.

The greenback rose as much as 0.8% to 158.255 against the Yen, putting the Japanese currency at its softest in over a month. At the time of writing, the Dollar gained 0.4% at 157.61 against the Yen, Reuters reports.

“The Yen is weaker today understandably given the BOJ has once again failed to meet market (and our) expectations that had moved to expecting the commencement of a slower pace of purchases of (government bonds),” said a note by MUFG currency analysts.

“It is more significant from a signalling perspective and again underlines BOJ caution that raises expectations of a 'go-slow' reversal of the BOJ's ultra-easy stance,” they went on to add.

After the meeting the central bank governor, Kazuo Ueda said the BOJ was “paying close attention” to the effect of the weak Yen on inflation, saying a rate hike next month was a possibility, depending on the economic data.

Furthermore, the Dollar index, tracking the currency against six peers, rose 0.3% to 105.51, the highest level in a month, the Reuters report adds. 

Whereas the Euro was on course for a 1% weekly fall against the Dollar, the largest weekly drop in two months. At the time of writing, it was 0.4% down at $1.069450 on Friday.

In addition, Sterling declined 0.3% to $1.27245 against the Dollar.