Japanese Yen plummets against its peers on BoJ rate hike uncertainty
- The Japanese Yen continues to underperform amid uncertainty over the BoJ’s interest rate hike plans.
- Japanese PM Takaichi seems not in favor of the BoJ’s intentions to raise interest rates further.
- The US Dollar recovers its early losses, driven by Trump’s SOTU address before Congress.
The Japanese Yen plunges against its major currency peers, is down 0.6% to near 156.80 against the US Dollar (USD) during the European trading session on Wednesday. The USD/JPY pair strengthens as the JPY underperforms after a report from the Mainichi daily on Tuesday signaled that Japan's Prime Minister (PM) Sanae Takaichi is not in favor of the Bank of Japan’s (BoJ) plans to raise interest rates further.
Japanese Yen Price Today
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the weakest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.02% | -0.04% | 0.61% | 0.00% | -0.27% | 0.09% | 0.23% | |
| EUR | -0.02% | -0.06% | 0.59% | -0.01% | -0.29% | 0.07% | 0.21% | |
| GBP | 0.04% | 0.06% | 0.66% | 0.04% | -0.23% | 0.13% | 0.27% | |
| JPY | -0.61% | -0.59% | -0.66% | -0.60% | -0.87% | -0.52% | -0.37% | |
| CAD | -0.00% | 0.01% | -0.04% | 0.60% | -0.27% | 0.08% | 0.22% | |
| AUD | 0.27% | 0.29% | 0.23% | 0.87% | 0.27% | 0.36% | 0.50% | |
| NZD | -0.09% | -0.07% | -0.13% | 0.52% | -0.08% | -0.36% | 0.14% | |
| CHF | -0.23% | -0.21% | -0.27% | 0.37% | -0.22% | -0.50% | -0.14% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
Takaichi voiced concerns over BoJ’s intentions to hike interest rates further in her meeting with Governor Kazuo Ueda, which happened last week on February 16, the report showed.
Above that, the Japanese government has nominated two new members: Toichiro Asada and Ayano Sato to join the central bank's nine-member board, a day after the Mainichi daily report. Market participants could see the move as Japan PM Takaichi’s attempt to boost her monetary policy preferences.
Meanwhile, the US Dollar recovers its early losses and turns higher ahead of the United States (US) markets' opening. During the press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, is up 0.1% to near 98.00.
Earlier in the day, the US Dollar dropped after United States (US) President Donald Trump delivered his first State of the Union (SOTU) address of his second administration before a joint session of Congress.
Bank of Japan FAQs
The Bank of Japan (BoJ) is the Japanese central bank, which sets monetary policy in the country. Its mandate is to issue banknotes and carry out currency and monetary control to ensure price stability, which means an inflation target of around 2%.
The Bank of Japan embarked in an ultra-loose monetary policy in 2013 in order to stimulate the economy and fuel inflation amid a low-inflationary environment. The bank’s policy is based on Quantitative and Qualitative Easing (QQE), or printing notes to buy assets such as government or corporate bonds to provide liquidity. In 2016, the bank doubled down on its strategy and further loosened policy by first introducing negative interest rates and then directly controlling the yield of its 10-year government bonds. In March 2024, the BoJ lifted interest rates, effectively retreating from the ultra-loose monetary policy stance.
The Bank’s massive stimulus caused the Yen to depreciate against its main currency peers. This process exacerbated in 2022 and 2023 due to an increasing policy divergence between the Bank of Japan and other main central banks, which opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ’s policy led to a widening differential with other currencies, dragging down the value of the Yen. This trend partly reversed in 2024, when the BoJ decided to abandon its ultra-loose policy stance.
A weaker Yen and the spike in global energy prices led to an increase in Japanese inflation, which exceeded the BoJ’s 2% target. The prospect of rising salaries in the country – a key element fuelling inflation – also contributed to the move.
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