Morning commuters in front of the Bank of Japan (BOJ) headquarters in Tokyo, Japan, Monday, January 16, 2023. The Bank of Japan did not change its yield curve control policy on Wednesday.
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The Japanese currency fell against the US dollar after the Bank of Japan surprised the market by keeping the yield curve’s tolerance band unchanged.
At If Japan fell 2.04% against the US dollar shortly after the decision was announced and ended at 130.35, hovering at its strongest level since June 2022.
“Japan’s economy is expected to continue to expand at a pace above its potential growth rate,” the Bank of Japan said in a statement. The central bank left interest rates unchanged at an ultra-dovish -0.1% – in line with expectations and maintaining the same level since 2016.
The decision not to make changes in monetary policy comes after the central bank caught global markets off guard in the previous meeting by widening some tolerance for the yield on the 10-year government bond from 25 basis points to 50 basis points in December.
Since last month’s move, the 10-year JGB yield has crossed the upper ceiling several times.
The yield on the 10-year JGB exceeded the ceiling above its band for the fifth straight session on Wednesday morning and last stood at 0.507%.
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