Japanese yen weakens as Bank of Japan makes no changes to yield curve range

Japanese yen weakens as Bank of Japan makes no changes to yield curve range

Morning commuters in front of the Bank of Japan (BOJ) headquarters in Tokyo, Japan, Monday, January 16, 2023. The Bank of Japan made no changes to its yield curve control policy on Wednesday.

Bloomberg | Bloomberg | Getty Images

The Japanese currency weakened against the US dollar after the Bank of Japan surprised markets by leaving its yield curve tolerance band unchanged.

The Japanese yen weakened 2.04% against the US dollar shortly after the decision was announced, to last trade at 130.35, its strongest since June 2022.

“Japan’s economy is projected to continue growing at a rate above its potential growth rate,” the Bank of Japan said in a statement. The central bank left its interest rate unchanged at an ultra-loose -0.1% – in line with expectations and maintaining the same rate it has maintained since 2016.

The decision to keep monetary policy unchanged comes after the central bank surprised global markets at its last meeting by widening its tolerance range for the yield on its 10-year government bond to 50 basis points from 25 basis points in December.

Since moving last month, 10-year JGB yields have breached the ceiling several times.

The yield on the 10-year JGB breached the top of its band for the fifth consecutive day on Wednesday morning, last trading at 0.507%.

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