JPY appears very weak. Overview for 19.03.2024

The Japanese yen dropped against the US dollar once again. The current exchange rate for USDJPY stands at 150.05.

Thus, the yen is at a two-week low, and its position has not improved even with the Bank of Japan’s sensational decision to abandon its ultra-soft policy of negative interest rates.

The Japanese regulator raised the interest rate for the first time in 17 years today. The indicator stood at 0% per annum compared to the previous -0.1%. This move is the first since 2007. Interest rates have been in the negative for the past eight years.

The CB made this fateful decision based on rising inflation and confident wage dynamics. It also abandoned the yield curve control policy and is now abolishing the benchmark for 10-year bond yields. Additionally, the regulator will no longer buy ETF and J-REIT securities and will gradually reduce the volume of commercial securities and corporate bond purchases. It will take about a year to complete such operations entirely.

The Bank of Japan will likely progress slowly and cautiously on the interest rate issue, and there will be no rapid surge upwards here.

The yen fell because the market had long craved this decision, and the result is now reflected in the quotations.