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The Japanese yen strengthened sharply against the dollar and the Nikkei tumbled on Thursday after the Bank of Japan kept monetary policy steady as was widely expected.

The dollar-yen pair traded at 104.10 as of 1:16 p.m. HK/SIN, compared with levels around 105.21 just before the decision. The BOJ decision was announced while Japan's stock market was closed for its lunch break. The Nikkei 225 extended losses, dropping 3.1 percent to 15,426.09 in the afternoon, compared with a 1.10 percent decline before the decision. The Japanese benchmark index was at lows not seen since February 2016.

The yen's strength came despite jawboning likely aimed at weakening the currency. Before the BOJ announcement, Japan's chief government spokesman said the yen's moves were being closely watched, calling the appreciation rapid and speculative, according to a Reuters report.

The rest of Asian markets mostly traded lower, as investors digested the Federal Reserve's decision to keep interest rates on hold.

In South Korea, the Kospi traded down 1.04 percent.

In Hong Kong, the Hang Seng index fell 2.16 percent. Chinese mainland markets were mixed, with the Shanghai composite down 0.19 percent and the Shenzhen composite up 0.22 percent. That followed gains on Wednesday when the markets largely ignored a snub from MSCI, which made the decision to keep mainland listed shares out of its key emerging markets index.

Bucking the trend, Australia's benchmark ASX 200 gave up gains to trade flat.

The Federal Open Market Committee held its interest rate target at 0.25-0.50 percent on Wednesday, after a two-day policy meeting.

In its post-meeting statement, the Fed noted that the unemployment rate had declined (to 4.7 percent) but "job gains have diminished." Fed Chair Janet Yellen said in a press conference following the statement release that the Brexit vote, due on June 23, was also one of the factors in Wednesday's decision.

The Fed's dot plot of future rate projections indicated there was still a greater likelihood of two moves before the end of 2016, but doubts have increased that that will happen.

"The level of confidence in that central case view is now less, with six members anticipating only one hike this year," said ANZ's Brian Martin.

Martin added that while all Fed meetings were considered "live," the market pricing for a possible hike in July had fallen to almost zero. "

Analysts noted that the markets didn't seem to appreciate the dovish bent.

Angus Nicholson, a market analyst at spreadbettor IG, said on Thursday, "Equity markets did not take the release especially well, with US markets closing down for the fifth day in a row...In the wake of the release, gold saw some minor gains, as did emerging market currencies and high yield debt."

The dollar weakened against a basket of currencies, with the dollar index trading at 94.306 as of 1:18 p.m. HK/SIN, compared with levels near 94.798 on Wednesday afternoon Asia time.

The onshore Chinese yuan traded at 6.5740 against the dollar, after the People's Bank of China set the yuan mid-point at 6.5739 on Thursday. China's central bank lets the yuan spot rate rise or fall a maximum of 2 percent against the dollar, relative to the official fixing rate.

Oil prices fell for a fifth straight day overnight amid global uncertainties, particularly around the prospect of the U.K. leaving the EU following its June 23 referendum. On Thursday morning Asia time, global benchmark Brent traded down 0.76 percent at USD 48.61 a barrel, after finishing down 1.7 percent overnight. US crude futures were down 0.9 percent at USD 47.58, after dropping 1 percent in US hours.

Spot gold traded up 0.88 percent at USD 1,302.50 an ounce, following the Fed decision and weakness in the dollar. Gold miners in the region were up sharply, with Newcrest adding 3.01 percent and Evolution Mining up 5.6 percent.

In company news, shares of Australia's Crown Resorts soared 12.88 percent, after the company announced plans for a demerger of its Australian and international investments.

Ratings agency Standard & Poor's cut commodities trader Noble Group's credit rating deeper into junk status on Wednesday. Noble's long-term corporate credit rating was downgraded to B+ from BB-.

"We downgraded Noble to reflect our view that the company's liquidity position has weakened despite the recent completion of refinancing and a proposed USUSD 500 million fully underwritten rights issue," S&P Global Ratings credit analyst Danny Huang said in a media release.

Stateside, the Dow Jones industrial average closed down 34.65 points, or 0.2 percent, at 17,640.17. The S&P 500 index was down 3.82 points, or 0.18 percent, at 2,071.50 and the Nasdaq composite finished down 8.62 points, or 0.18 percent, at 4,834.93.

First Published:Jun 16, 2016 11:29 AM IST