Japanese yen is gaining ground against its major counterparts after the Bank of Japan surprised markets by keeping its benchmark rate the same, and staying the course on the current stimulus package.
Many analysts and Forex traders had expected the Bank of Japan to loosen monetary policy and increase stimulus, considering the challenges that have been plaguing the Japanese economy. However, when BOJ Governor Haruhiko Kuroda announced the central bank’s decision, it was to say that there would be no change.
The announcement stunned markets, sending global stocks into a drop and spurring gains for the Japanese yen against its major counterparts. Indeed, the news has led to the biggest one-day gain the yen has seen against the dollar since May 2010.
Governor Kuroda has made it a habit to shock the markets, but now that the surprise is wearing off, there is speculation that the BOJ is running out of ammunition and ideas for boosting the economy. In January, the BOJ instituted negative interest rates on some deposits, and Kuroda says that policymakers are still waiting to see those results.
At 13:41 GMT USD/JPY is down to 108.6400 from the open at 111.4620. EUR/JPY is down to 123.0740 from the open at 126.2340. GBP/JPY is down to 158.1280 from the open at 162.1030.
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