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Yen rallies after Bank of Japan policy meeting

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The Japanese Yen rallied on Friday as the Bank of Japan announced it would increase the flexibility of the yield curve control policy, whilst the US Dollar remained steady against the majority of other rivals


The Yen reached as much as 138.05 per Dollar before edging down to 141.20, Reuters reports. At the time of writing, the Yen stood at 138.60, a 0.61% gain against the Dollar.


In addition, the Japanese currency was also broadly higher against other peers, up 1.4% against the Australian Dollar to close to a two-month top of 91.81. The Yen also rose 0.6% against the Euro and 0.5% against the Singapore Dollar.


The Bank of Japan’s (BOJ) two-day policy meeting concluded on Friday, where it was decided to keep the short-term interest rate target the same at -0.1% and around 0% for the 10-year government bond yield.


However, markets were focused on the central bank, saying it would offer to purchase 10-year Japanese government bonds (JGB) at 1.0% in fixed-rate operations, as opposed to the prior rate of 0.5%. 


“Even though market reaction is choppy, this is a clear sign that BOJ will take mini-steps to tighten policy if inflation pressures remain,” stated Charu Chanana, market strategist at Saxo Markets. 


“Effectively, markets will test the 1% cap, and that can be bullish for the Yen, while global liquidity conditions could be impacted as well as Yen carry trades start to reverse.” 


Furthermore, the Australian Dollar fell 0.75% to $0.6659, whilst the New Zealand Dollar edged down 0.37% to $0.6159. 


Earlier in the week, both the Federal Reserve and European Central Bank (ECB) increased policy rates by 25 basis points. Yet the ECB indicated a likely pause in September. 


“There is the possibility of a hike (next time). There is the possibility of a pause. It's a decisive maybe,” said ECB President Lagarde on Thursday, which subsequently sent the Euro down 1%. Yet on Friday, the single currency was down 0.14% to $1.0958.


The Dollar index – measuring the greenback against a basket of rivals – edged up 0.108% to 101.780 after increasing 0.66% overnight.

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Mauritius,
J. Balcikonio str. 9,
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Lithuania,

media contact

About

deVere Group – Foreign Exchange’s Public Relations Department deals with all areas of the media and external communications including international, national, regional, local, trade, consumer, print, broadcast, social and online. The Department aims to provide a helpful service to journalists, broadcasters and editors, amongst others, and reply to all media enquiries, including urgent enquiries out of hours, within agreed deadlines.

Contact

Our press office does not have access to client details and will not be able to assist with individual client enquiries. Please contact deVere Group – Foreign Exchange’s Head of Public Relations on [email protected] or call +44 2071220925.