Currency News: BOJ Holds Its Stance
Currency News
In currency news, the Federal Reserve and China’s central bank raised borrowing costs. Although, the Bank of Japan (BOJ) stood firm. As expected, the BOJ rate announcement was a non-event. The central bank has opted to leave rates at the same -0.10% it has for the past year. With inflation rates still well below the target of 2%, it is unlikely the BOJ will succumb to any external pressure and increase rates. The BOJ would be intent on not repeating the same mistakes it made in 2000 and 2006, when it prematurely tightened rates.
On Monday the 20th of March, financial markets and government offices will be closed in Japan for a national holiday. After a decline of 1.1% last Wednesday, the 15th of March, the JPN/USD remains somewhat unchanged, trading just below 113. Interesting to note is the fact that the yen, has fallen more than any other currency against the USD, since the U.S election. As of late, the USD has traded in narrow range against the Yen. If the dollar rises above Y113.60-Y113.70, it would come as no surprise if the pair moved sideways.
With the global economy starting to pick up, Japanese exports are on the rebound, promising albeit slow, future economic growth. As a result, future outlook for the Japanese Yen remains bearish, as the BOJ sticks to its non-standard measures.
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