The Japanese yen was mixed today after the Bank of Japan boosted measures to stimulate the national economy at today’s shortened one-day meeting. The currency fell against the Australian and New Zealand dollars as well as the Great Britain pound but managed to gain on the US dollar and the Swiss franc.
The Bank of Japan announced that it is going to purchase as many government bonds as necessary to keep the 10-year bond yields at around zero percent, removing the previous limit of ¥80 trillion per annum. Experts thought that it was largely a symbolic move as asset purchases have slowed, staying far below the cap. The BoJ also announced that it will be purchasing corporate papers and corporate bonds to the total maximum amount of ¥20 trillion. On top of that, the central bank boosted the Special Funds-Supplying Operations to Facilitate Financing in Response to the Novel Coronavirus (COVID-19), expanding the range of acceptable collateral and the number of eligible counterparties, with the positive interest rate of 0.1%. The central bank kept its benchmark short-term policy interest rate unchanged at -0.1%.
The BoJ also significantly lowered its economic forecasts compared with the January predictions due to the COVID-19 pandemic. The forecast change for the gross domestic product was reduced from an increase of 0.8%-0.9% to a drop of 0.4%-0.1% for the fiscal year of 2019, from an increase of 0.8%-1.1% to a slump of 5.0%-3.0% for 2020, though it boosted the outlook for 2021 from a growth of 1.0%-1.3% to a jump of 2.8%-3.9%. The core Consumer Price Index (which excludes fresh food as well as the effects of the tax hike) was remained about unchanged for fiscal 2019 but got a negative revision from an increase of 0.9%-1.0% to a drop of 0.8%-0.4% for 2020 and from an increase of 1.2%-1.6% to a gain of 0%-0.7% for 2021.
USD/JPY dropped from 107.54 to 107.15 as of 6:20 GMT today while CHF/JPY slid from 110.49 to 110.23. AUD/JPY rallied from 68.63 to 69.17 and GBP/JPY edged up from 132.95 to 133.28.
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