Yen strengthened on statements of Bank of Japan
2022.12.20 02:15
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Yen strengthened on statements of Bank of Japan
Budrigannews.com – On Tuesday, the Bank of Japan made an unexpected change by widening the trading band for the 10-year government bond yield and announcing that it would review its yield curve control policy. As a result, the yen rose to a four-month high against the dollar.
The allowable band for long-term yields was increased from 25 basis points to 50 basis points, but the broad policy settings remained the same, with short-term JGB yields fixed at -0.1% and the 10-year yield close to zero.
The dollar tumbled as much as 3.1% to 132.68 yen, a level last seen in mid-August.
Now, the BOJ Governor Haruhiko Kuroda’s media briefing later in the day will be closely watched for any further indications of a shift away from ultra-easy policy. The majority of observers of the BOJ anticipated no changes until his 10-year term ended at the end of March.
“This was truly out of the container,” said Bart Wakabayashi, branch administrator at State Road (NYSE:) in Japan.
He added, “We’re seeing them begin to test the market regarding the exit strategy.” We may see a break below 130, but that will depend on Kuroda’s remarks later today. This year, it is very much within reach.”
The 10-year JGB yield increased from the previous limit of 0.25% to 0.46 percent. It also increased yields on equivalent U.S. Treasury securities, with the 10-year rising to a record-high of 3.711% this month.
The sank to 104.42, a loss of 0.21 percent, resuming its trading range of 103.44 to 105.90 this month. The dollar is compared to the yen and five other major peers, including the euro and sterling, by the index.
It had been moving towards the highest point of that reach before the BOJ declaration as financial backers kept on processing the Central bank’s message of higher loan fees for longer.
The euro fell by about 3% to its lowest level since Dec. 2 at 140.90 yen, and sterling also fell by about 3% to its lowest level since Oct. 12 at 160.87 yen, illustrating the breadth of the yen’s gains.
The euro fell 0.26 percent to $1.0579 against the US dollar, while sterling fell 0.33 percent to $1.2105.
To 88.37 yen, a seven-month low, and 84.11 yen, a 5-1/2-week low, respectively, the New Zealand dollar and yen both lost about 3.5%.
In an email, City Index market analyst Matt Simpson wrote, “You can look across any yen pair and they look very similar – strength to the yen to the detriment of the currency you trade it against.”
“From here is looks like could be set out toward 130 since it has broken to another cycle low.”
More Dollar is falling against all currencies
Following a significant decline in a survey of local business confidence, the New Zealand dollar fell as much as 1% to $0.6301, a two-week low against the US dollar. This followed earlier declines.
For the first time since November 22, the Australian dollar fell as much as 1% to $0.6629.
