Japanese Yen gives up some gains as BoJ hikes interest rates by 25 bps to 1%, as expected
- The Japanese Yen gives back some of its early gains against the Euro after the BoJ’s monetary policy decision.
- The BoJ decides to raise interest rates by 25 bps to 1%, as expected.
- An array of ECB officials expect that the central bank needs to do more, while warning of upside inflation risks.
The Japanese Yen (JPY) surrenders some of its early gains against its major currency peers during the Asian trading session after the Bank of Japan’s (BoJ) monetary policy decision. The EUR/JPY pair rebounds from the day’s low of 185.45 to near 185.65, but is still 0.12% higher than its Monday closing price, as the BoJ has raised interest rates by 25 basis points (bps) to 1%, as expected, in the absence of Governor Kazuo Ueda, who has been hospitalized.
Japanese Yen Price Today
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.04% | 0.08% | -0.08% | 0.06% | 0.18% | 0.21% | 0.05% | |
| EUR | -0.04% | 0.05% | -0.07% | 0.06% | 0.13% | 0.16% | 0.02% | |
| GBP | -0.08% | -0.05% | -0.13% | 0.00% | 0.07% | 0.12% | -0.03% | |
| JPY | 0.08% | 0.07% | 0.13% | 0.12% | 0.23% | 0.28% | 0.14% | |
| CAD | -0.06% | -0.06% | -0.00% | -0.12% | 0.11% | 0.14% | -0.02% | |
| AUD | -0.18% | -0.13% | -0.07% | -0.23% | -0.11% | 0.05% | -0.10% | |
| NZD | -0.21% | -0.16% | -0.12% | -0.28% | -0.14% | -0.05% | -0.15% | |
| CHF | -0.05% | -0.02% | 0.03% | -0.14% | 0.02% | 0.10% | 0.15% |
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).
The Japanese central bank was expected to tighten its monetary conditions to counter higher inflationary pressures, driven by elevated energy prices due to Middle East conflicts.
Meanwhile, investors await BoJ’s monetary policy guidance from Deputy Governor Shinichi Uchida, who will brief the media on behalf of recently hospitalized Governor Ueda.
The Euro trades higher against its other peers, as a slew of European Central Bank (ECB) officials have predicted that the central bank would need to do more to tame inflation, even as a peace deal between the United States (US) and Iran has been confirmed and the Strait of Hormuz, a vital passage to almost 20% of global energy supply, has been reopened.
ECB Governing Council Member and President of the Deutsche Bundesbank, Joachim Nage,l said on Monday that there seems to be no relief from high inflation in the foreseeable future, as it will take “months for oil supply to return to normal”. Nagel also warned of “second-round effects of inflation” and stated that the central bank is “keeping all options open for July meeting”.
ECB Governing Council member Martins Kazaks also stated on Monday that the central bank “needs to act again, if needed,” while predicting upside inflation risks to persist.
Later in the day, investors will focus on German ZEW Survey data for June, which will be published at 09:00 GMT.
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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