Slight boost to Yen with interest rate decision

Confirmation of what was widely expected came through in the very early hours of this morning, with the Bank of Japan interest rate decision being held still just in negative territory at 0.1%.

It was not only here, but monetary policy as a whole was left unchanged. They are also keeping up their long term and hefty quantitative and qualitative easing monetary easing with an aim to returning to interest rates out of negative territory.

This decision to leave these frankly extreme policy settings unchanged was a tentative move, given that forecasts for growth in the next two financial years have been upgraded in recent months by the same institution.

With the likes of the US raising interest rates, the first to do so since the financial crisis, it’s now becoming more obvious to currency markets when central banks do not have the confidence to back their own economy.

You are already seeing this growth. Construction figures just last month were up 7.1% in the Japanese economy. So such a tentative stance may catch up to the Yen in the future. But for now, the move did not filter through into much currency market movement.

Further monetary news to come out throughout the week

Tomorrow and Thursday evening, specifics from their most recent meeting of the monetary policy committee will hit the wire, alongside a look at foreign investment figures into the Japanese economy.

For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me here.

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