Jpy Slides On Boj Comments

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Jpy Slides On Boj Comments

Japanese Yen (Jpy) Slides On Boj Governor Comments

The US Dollar remained firm against the Japanese Yen (JPY) on Wednesday and even gained 2%. The recent decline in the Japanese Yen (JPY) comes after the BoJ government comments.

Bank of Japan's governor made it clear that they will not raise the rates when there's instability in the financial markets. These comments were not received well by the traders as they pushed the Japanese Yen (JPY) down by almost 1.5%.

No Rate Hikes Until Volatility Drops

Right now, the exchange rate of USD/JPY is 146.70 with +1.5% intraday gains. Earlier, the pair had touched a high of 147.50 which shows that the Japanese Yen is under pressure.

Right now, there is instability in the market amid the unwinding of carry trades and the fears of a recession in the US economy.

According to BoJ's governor, overseas and domestic financial markets are going through a period of sharp volatility. That's why it is important to maintain a certain degree of monetary easing for now.

If we look back, Yen was trading at historic lows against the USD, EUR, AUD, & other currencies. This has now been corrected to some extent after multiple interventions from the BoJ and major changes in the monetary policy.

One expert believes that the comments from the BoJ governor have somewhat saved the carry trade but it will not be for long. As the BoJ will roll out further rate hikes while the US Federal Reserve will lower its policy rate, that will mark the end of the carry trade.

Right now, the market's risk structure depends heavily on Japan's policy. Besides that, the data released from the US are also important as it would shape the Fed's monetary policy.

The market is going through high volatility this week after the release of a weak US job market. Also, the major tech companies in the USA released their earning reports which were disappointing.

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