Yen steady after BoJ stands pat with policy as expected

THE yen fluctuated in a tight range last Friday immediately after the Bank of Japan (BoJ) maintained its super-easy monetary policy as expected. 

The currency was little changed around the 146.25 per dollar level, having rallied almost 4% from last week’s three-decade low which triggered more suspected intervention from Japan. A Citigroup Inc. gauge of trader positioning suggested they were taking the threat of further action seriously, with net shorts shrinking to the least in almost a year. 

Economists unanimously saw the central bank keeping policy unchanged. But when the BoJ stood pat last month, the yen tumbled, sparking Japan’s first intervention to support the currency since 1998. 

“The rapid yen depreciation will not deter the Bank of Japan from keeping monetary policy settings unchanged at its meeting today,” Carol Kong, an economist and currency strategist at Commonwealth Bank of Australia, wrote in a note last Friday before the meeting. “Today’s BoJ meeting will likely be the catalyst for a recovery in dollar-yen.” 

The Japanese currency has slumped over 20% this year as traders focused on the widening yield gap between the US and Japan, with the Federal Reserve hiking rates aggressively and the BoJ keeping them at rock-bottom levels to boost the economy. Bloomberg

  • This article first appeared in The Malaysian Reserve weekly print edition