Japanese Yen gives back some early gains; still remains firm on hawkish BoJ hopes
- The Japanese Yen trades higher against the US Dollar as BoJ’s Ueda keeps rate hike hopes on the table.
- BoJ’s Ueda said that the central bank will scrutinize data in March and April before making any interest rate adjustment.
- Investors await US-Iran nuclear talks scheduled later in the day.
The Japanese Yen (JPY) surrenders half of its early gains, but is still 0.2% up to near 156.00 against the US Dollar (USD) during the European trading session on Thursday. The USD/JPY pair has come under pressure after rising for two trading days, following comments from Bank of Japan (BoJ) Governor Kazuo Ueda signaling that the option of an interest rate hike is still on the table.
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 British Pound.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.00% | 0.16% | -0.27% | -0.05% | 0.07% | 0.11% | -0.00% | |
| EUR | -0.00% | 0.16% | -0.24% | -0.06% | 0.06% | 0.11% | 0.00% | |
| GBP | -0.16% | -0.16% | -0.40% | -0.21% | -0.10% | -0.05% | -0.16% | |
| JPY | 0.27% | 0.24% | 0.40% | 0.20% | 0.32% | 0.35% | 0.26% | |
| CAD | 0.05% | 0.06% | 0.21% | -0.20% | 0.13% | 0.17% | 0.04% | |
| AUD | -0.07% | -0.06% | 0.10% | -0.32% | -0.13% | 0.05% | -0.07% | |
| NZD | -0.11% | -0.11% | 0.05% | -0.35% | -0.17% | -0.05% | -0.12% | |
| CHF | 0.00% | -0.00% | 0.16% | -0.26% | -0.04% | 0.07% | 0.12% |
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).
BoJ’s Ueda said in an interview with Yomiuri newspaper on Tuesday, released earlier in the day, that the central bank will scrutinize available data in the March and April policy meetings and then will decide on hiking interest rates during the year. Ueda reiterated, “Our basic stance is to continue raising interest rates if the likelihood of our economic, price forecasts materialising heightens.”
In the last two trading days, the Japanese Yen (JPY) remained under pressure as a report from Mainichi daily showed this week that Japan’s Prime Minister (PM) Sanae Takaichi voiced concerns over BoJ’s intentions to hike interest rates further in her meeting with Governor Kazuo Ueda, which took place on February 16.
Above that, the government also nominated Toichiro Asada and Ayano Sato to fill the central bank’s nine-member board, who are seen as strong advocates of economic stimulus, a scenario that raises concerns over hawkish BoJ prospects.
Meanwhile, the US Dollar (USD) trades marginally higher ahead of nuclear talks between the United States (US) and Iran in Geneva later in the day. As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades marginally higher to near 97.70. In the meeting, the US wants Tehran to give up its plans to build nuclear facilities.
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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