The Japanese yen rallied today after the Bank of Japan left its monetary policy unchanged, refraining from adding monetary accommodation. Absence of stimulating measures is usually positive for a currency, and so it was in this case.
The BoJ left interest rates near zero and the size of annual asset purchases at ¥60–70 trillion, in line with market expectations. The central bank said in the statement that “Japan’s economy has continued to recover moderately as a trend” and “Japan’s economy is expected to continue a moderate recovery as a trend, while it will be affected by the subsequent decline in demand following the front-loaded increase prior to the consumption tax hike”. All in all, it looks like the bank is certain that it is able to reach its 2 percent inflation goal and will likely not act until reaches the target.
USD/JPY fell from 101.31 to 101.03, reaching the low of 100.82 intraday, and EUR/JPY dropped from 138.80 to 138.19 as of 12:17 GMT today.
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