Jpy Falls On Historic Boj Pivot

last updated on

Jpy Falls On Historic Boj Pivot

Japanese Yen (Jpy) Falls On Historic Boj Pivot

For the first time in more than a decade, the Japanese central bank announced that it is ending the negative interest rate policy. This was a highly anticipated decision, but it appears that it was not good for the local currency.

After all, the JPY lost its positive momentum, which was rather odd as an end of negative interest rates was supposed to boost it! Meanwhile, the rates were also kept steady by the RBA, which caused the AUD to be lower.

Boj Changes Policy After 8 Years

It's been decades since the BoJ has provided massive stimulus to the markets. If we look at the negative rates, they have been around for almost eight years now. However, all of this has come to an end at the recent BoJ meeting.

After the announcement, the JPY declined by 0.8% and lost the 150.00 handle to the greenback. According to experts, the policy pivot was priced in by the investors, which is why the JPY didn't appreciate.

When checked last time, the Japanese Yen was trading at 150.39 against the greenback. As for the EUR/JPY, a 0.7% gain was seen, which sent the pair towards the 163.425.

According to one expert, the price action followed by the BoJ policy shift was a classic tactic of buying the rumor but selling the fact. They added that the BoJ didn't want to shock the markets, but it could be hard to avoid that.

Overall, that's the first rate hike in almost 17 years, and it has been a historic moment without any doubt. As for the range of the new policy rate, it will be around 0 - 0.1%, which is near zero but is in the positive range.

Although the BoJ is moving into positive rates territory, there's still a stark difference between the interest rates of the USA and Japan. As a result, the USD/JPY will maintain a bullish approach in the near term.

Trending Stories