Since last year’s October, the Bank of Japan (BoJ) has kept interest rates negative and maintained, with a little tweak, its yield curve control (YCC) policy, causing the Japanese yen (JPY) to surpass 150 to the dollar.
The central bank said it will remove its 1% bond limit and instead “nimbly conduct market operations” to achieve the same goal.
The yield on 10-year Japanese bonds is now 0.95%, up from 0.1% a year ago, on expectations that the country’s central bank would soon begin to tighten monetary policy.
“Today’s BoJ summit has not caused the reset on how we view the yen and the risk is now that USD/JPY moves ahead to 152 and pushes the central bank into aggressive FX intervention,” according to Chris Turner, an ING analyst.
The Bank of Japan (BoJ) has raised its inflation projection for 2024 from 1.9% to 2.8% for core inflation, while maintaining its annual ETF purchase program of 12 trillion yen ($80 billion).
Since the value of the yen has dropped by 50% since 2021, from 100 to the dollar to presently over 150, the price of bitcoin in Japan is the equal of $50,000 in 2021 values, albeit it trades at global pricing levels.
The central bank anticipates inflation to fall below the target rate of 2% in 2025, leading others to predict a further decline, maybe to 170. In September, it has reached a level of 3%.
As Japan is now the only nation in the world with negative interest rates, the country’s GDP has decreased from over $5 trillion to $4 trillion.
The Japanese yen has not actively changed in response to these choices by the central bank, and a study has shown that “there exists only a linkage between cryptocurrencies and the US dollar.”
Dollar strength index (DXY) has not responded as yen has only marginally advanced to above resistance at 150, despite the fact that dollar value is related to that of other currencies.
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