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The Bank of Japan's monetary policy meeting concluded as expected
with a decision to maintain policy interest rates.
“The Bank of Japan’s monetary policy meeting concluded as expected, with a decision to maintain policy interest rates and uphold the Yield Curve Control (YCC) framework and asset purchasing guidelines without any changes”
The accompanying statement provided no significant deviations from market expectations, aligning with the prevailing consensus.
Nevertheless, the announcement triggered a noticeable surge in yen selling. The USD/JPY pair had already experienced a decline from the 141-yen level in the previous day’s overseas markets to the lower 140-yen range, and this downward trajectory persisted into the Tokyo market, briefly touching 139.85 yen during the morning session. Following a rebound to the 140-yen level, the pair surged sharply to 140.77 yen upon the release of the Bank of Japan’s decision. Although a brief consolidation occurred around the 140.20 yen mark, renewed yen selling pressure, accompanied by upward movements in other yen crosses, propelled the pair to reach 140.80 yen.
Similar trading patterns were observed among other yen crosses. The euro/yen pair, starting from the mid-153-yen range in the morning, faced yen buying pressure, causing a decline to 153.10 yen, followed by a surge to approximately 153.30 yen after the meeting results were announced. After a minor correction, it climbed to the 154-yen range. Meanwhile, the pound/yen pair dropped from the high 179-yen range to reach 178.83 yen before the meeting announcement, and then rose to 179.70 yen. With the participation of London market players, the pair experienced accelerated upward momentum, surpassing the significant threshold of 180 yen.
Although expectations for the Bank of Japan’s adjustment to the YCC framework had been evident among foreign investors, there was no substantial increase in yen bond yields on this occasion. It is believed that overseas investors had already factored in the likelihood of the status quo being maintained. However, persistent expectations for YCC adjustments and subsequent yen selling, resulting from the outcome remaining unchanged, were observed. The yield on the latest 10-year yen bond, which had previously exceeded 0.5% due to short selling, remained around 0.425% before the announcement. However, it experienced a sharp decline to 0.401% after the announcement, leaving an impression of selling pressure in the market.
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