The JPY sell-off is on pause. Overview for 22.01.2024

The Japanese yen, paired with the US dollar, has temporarily stopped to decline. The current USDJPY exchange rate stands at 148.04.

The market is filled with uncertainty ahead of Tuesday’s Bank of Japan meeting. On the one hand, it is evident that the interest rate will remain negative – the assessment of inflation is still ongoing. On the other hand, investors do not rule out optimistic comments on achieving BoJ’s inflation targets, which could support the JPY.

January will see no significant decisions. At the beginning of the month, an earthquake struck Japan, requiring financial efforts to recover from its effects. In addition, Kazuo Ueda, the Bank of Japan’s governor’s December comments on the regulator’s future actions were very mild. It is definitely not the best time to tighten monetary conditions for the first time since 2007.

Nevertheless, there is no doubt that the Bank of Japan is ready to end the negative interest rate. The question is when it will do so.

The chances of the BoJ revising its position are shifting towards April.