The JPY is knocked out. Overview for 10.03.2023

The Japanese yen is retreating from the US dollar again. The current quote is 136.66.

On Friday, the Bank of Japan had a meeting that ended in nothing. The interest rate remains at -0.10% per annum, as expected. The treasury bond yield control policy saw no changes either.

In the comments, the BoJ highlighted that had not changed its plans about the interest rate. At the same time, the BoJ sees that the GDP growth is speeding up. The Japanese economy will be recovering while the influence of the pandemic is fading away, and the limited supply is stabilising.

By the regulator’s valuation, base consumer inflation is about 4%. For Japan, this is a huge number but this news is more positive than negative. Inflation expectations are building up, and all the stimulation remains in force.

The market was disappointed: it is high time that the Bank of Japan turned to tightening measures yet it thinks that inflation is too unstable. The difference between the interest rates of the Boj and the Fed is huge, and this is pushing the JPY down.

The candidacy of Kazuo Ueda has been agreed upon in the Upper House of the Parliament. This means that he will take over the Bank of Japan after 9 April. As has been mentioned, for the yen this means that the current policy will remain in force, giving it base for devaluation.