The Japanese Yen is once again one of the weakest currencies among the G10 today, falling to record lows the day before the Bank of Japan (BOJ) decision. At the time of publication, despite a quiet start to the day on the Forex market, the JPY lost 0.3-0.4%. USD/JPY is up 0.30% at 155,700. The JPY’s weakness stems from investors’ lack of confidence in the BoJ’s ability to effectively defend further depreciation of the currency.
At tomorrow’s meeting, the BOJ is expected to keep its key interest rate at 0.1%. This decision follows the BOJ’s halting of yield curve control and asset purchases, signaling a shift in policy, albeit with a still accommodative outlook on future rate adjustments.
- Analysts remain skeptical of any significant policy changes that could strengthen the yen, suggesting the central bank is likely to maintain its accommodative stance.
- Bank of America has issued a warning that the USDJPY rate could quickly rise to 160, as the Bank of Japan appears largely powerless to stop this rise using only its verbal interventions.
Stever Barrow, head of G-10 strategy at Standard Bank, says the Bank of Japan could intervene to sell USD/JPY as early as Friday. He believes the Bank of Japan could discuss intervention at its meeting on Friday Japan time. The surgery could take place during American time or shortly after.
There is no shortage of voices in favor of a further weakening of the yen and the need for BOJ intervention. The next few weeks could be crucial for the long-term trend. Today, USD/JPY weakens to new record levels at 155,700.
Source: xStation 5
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