The Bank of Japan's policy meeting outcome has left many disappointed, leading to renewed selling of the yen.

USD/JPY News

USD/JPY surged by over 1% to a new multi-decade high at 157.40 in Friday's trading (April 26). The outcome of the Bank of Japan (BoJ) policy meeting this morning failed to provide sufficient guidance on the next interest rate hike, resulting in continued weakness of the yen exchange rate.

This morning, the BoJ maintained its target short-term interest rate at 0-0.1%. The Japanese central bank also kept its government bond purchasing program unchanged, although market participants had hoped for tapering measures to stem the yen's decline.

The BoJ expressed confidence that the inflation trend would continue to rise, reaching the target sustainably by the end of 2025 to 2026. The latest inflation projections indicate that Japan's CPI will reach 2.8% in fiscal year 2024, then moderate to 1.9% in 2025 and 2026.

BoJ Governor Kazuo Ueda said the central bank would raise interest rates again if new data suggest stronger inflationary pressures in Japan than expected. However, he did not provide further guidance on when the BoJ would raise interest rates again or implement tapering. Instead, Ueda reiterated his commitment to maintaining low-interest rates, even though such policies weaken the yen exchange rate.

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The BoJ's stance has disappointed many, leading to a renewed wave of yen selling. Moreover, more traders view Japan's intervention threats as mere bluffs.

"The currency takeaway is certainly disappointment from the lack of guidance coming from the Bank," said National Australia Bank strategist Rodrigo Catril, "To me the ... market is telling us it believes that the BOJ policy is too loose and hence why the currency is so weak. "The Bank has the ability to do something about that by changing its policy, and if it's not going to change the policy, then we shouldn't expect the yen to strengthen."

At the time of writing, the yen is tumbling against all other major currencies. EUR/JPY and GBP/JPY are now at their highest levels since August and September 2008 respectively. AUD/JPY has jumped to its highest level since April 2013.

USD/JPY continues to hit new highs since the 1990s. Not only affected by the calm attitude of the BoJ, the Ninja duo is also hit by the release of US inflation data surpassing consensus estimates.