The yen weakened and Japanese sovereign bonds surged after the central bank said it would reduce debt purchases but delayed providing details until its next policy meeting.

The yen slumped as much as 0.6% to 157.98 versus the dollar before trimming some of the losses. Benchmark 10-year bonds rose, sending yields as low as 0.915% while futures on the securities surged the most since late December. Swaps markets pricing shows traders paring bets for a rate hike by the central bank next month.

Monetary policy was left unchanged, as expected, but investors had been primed for more news on bond purchases, expecting the Bank of Japan to disclose the amount of cuts for its regular operations. The central bank’s announcement today may cap increases in debt yields but the gap between Japanese and US bond yields remains wide for now, weighing on the nation’s currency.

“The market is definitely not taking it as a step in the right direction, judging from the immediate reaction in the yen,” said Andrew Jackson, head of Japan Equity Strategy at Ortus Advisors Pte. The BOJ needs to cut back on its JGB purchases faster than it’s signaled, and if they don’t and continue with currency intervention that’s a “huge, unnecessary waste of money,” which is “like a robbing from Peter to pay Paul situation,” he said.

“This is much more dovish than the market expectation of a clear reduction in the bond buying amount to be announced today,” said Alvin Tan, head of Asia FX strategy at RBC Capital Markets. “It’s not at all clear at this point if the BOJ actually decided on a specific reduction of the bond purchase amount, or it will only decide on this at the next meeting.”

Authorities have signaled they’re ready to step into the market to support the yen. Japan spent a record ¥9.8 trillion ($62.1 billion) earlier this year to prop up the yen after it fell to a 34-year low against the dollar.

A sharp drop in the yen may spur concerns about intervention, helping to slow the move, according to Monex Inc. bond and currency trader Tsutomu Soma.

“The dollar-yen’s gain may halt at around mid-158s,” in the next few days, “because a very fast-paced rally would lead to intervention concerns,” Soma said. “The wide yield gap may stay until the Fed delivers its interest-rate cuts, making it difficult to hold dollar-long positions versus the yen and that would mean the bias remains for the yen to remain weak.”

The yen is the weakest among Group-of-10 currencies against the greenback so far this year, tumbling more than 10%, as the Federal Reserve refrains from cutting its benchmark interest rate amid resilient economic growth and sticky inflation. Fed officials penciled in just one interest-rate cut this year and forecast more cuts for 2025 as they voted unanimously to keep the benchmark rate earlier this week.