News that the Bank of Japan ( BOJ ), which has maintained an ultra-accommodative monetary policy, may adjust its yield curve control ( YCC ) policy was reported, and the value of the Japanese yen soared against major currencies such as the dollar and the euro.
According to <Bloomberg News> on the 27th (local time), in the New York foreign exchange market that day, the yen rebounded 2% against the euro, showing its strongest since March, and rose 1% against the dollar.
Earlier, the Nihon Keizai Shimbun reported카지노사이트 that the Bank of Japan would consider a plan to raise long-term interest rates through the YCC “at some level” above the upper limit of 0.5% .
In recent weeks, the market has been speculating that the Bank of Japan will suspend the YCC cap at its monetary policy meeting on the 28th. As the yen is likely to surge if the long-term interest rate cap is removed, traders have strengthened their hedge against the cap being removed.
Bank of Japan governor Kazuo Ueda, who took office earlier this year, adhered to the existing hyper-accommodative monetary policy, and the yen has fallen about 6% against the dollar this year alone.
Sean Osborne, chief FX strategist at Scotiabank, said: “Speculation on a policy adjustment has been wrong before, and while reports suggest the BoJ will only talk about adjusting the YCC, rising inflation, rising wages and the size of the Bank of Japan’s purchases are not likely . Looking at it, it suggests that the time for some adjustment is approaching.”
In December of last year, the Bank of Japan announced that it would raise the upper limit on the 10-year (long-term) government bond yield from 0.25% to 0.50%. In the aftermath, there was a ripple effect in the financial market as a whole. As government bond yields soared, the yen rose sharply, and US stocks, the Australian dollar and gold were also affected.
“The impact of YCC adjustment or scrapping is likely to have a very high ripple effect, and it is very likely that bond yields in other countries will also rise due to this,” said Win Tin, head of global currency strategy at Brown Brothers Harriman & Co. After Nihon Keizai’s report, US bond yields rose all at once. An increase in bond yields means a decrease in bond prices. “If the Bank of Japan adjusts the upper limit by 0.25 percentage point, the yen-dollar exchange rate will be close to the 135-136 range,” said Lai, head of global foreign exchange strategy, criticizing CIBC
. expected”. In a recent Bloomberg poll, 82% of economists expected the Bank of Japan to maintain policy at the meeting. On the other hand, 18% predicted that the Bank of Japan would adjust or abolish the YCC .