TOKYO (AFX-ASIA) - The dollar was rangebound against the yen after the Bank of Japan decided to leave monetary policy unchanged following a two-day policy board meeting, dealers said. The central bank by a majority vote also decided to leave outright purchases of Japanese government bonds at 800 bln yen, contrary to speculation that it would raise the amount to the 1 trln yen level. Earlier, the dollar had rallied to 134.17 yen on the back of such speculation, dealers said. Nikko Salomon Smith Barney chief strategist Kazuhiko Sano said there was no surprise in today's decision as "pressure for additional action from politicians was not strong this time, to begin with." Mitsubishi Trust and Banking Co Ltd foreign exchange manager Yasuharu Tsuru said even if the BoJ decided to hike JGB purchases to the speculated level, such action would not have had any lasting impact. "If investors interpret the action as another step towards deterioration of fiscal discipline, however, the yen may be pushed sharply lower ... possibly beyond the consensus (dollar) top-side of 135.50 yen level," he said. Investors also refrained from taking outright positions in the yen on caution ahead of the G7 finance ministers meeting in Ottawa this weekend, coupled with the three-day weekend in Japan, dealers said. Japanese markets are closed on Monday for a public holiday. However, Daiwa Securities SMBC chief strategist Shinji Nomura said the G7 ministers are likely to pay more attention to the global economy's prospects rather than to the forex issue. "Japan is most likely to be pressed harder to find a solution to the bad debt problem and achieve economic recovery," he said. Mitsubishi Trust's Tsuru said he expects the dollar to remain top-heavy against the yen due to the apparent change in the Ministry of Finance's foreign exchange stance. "The MoF will no longer try to guide the yen lower, as recent experience showed that such an attempt simply yields negative pressure on the local equity and bond markets," he said.