The US dollar rose above 150 yen on Tuesday in Tokyo amid yen selling driven by expectations that the Bank of Japan will maintain an accommodative stance despite the end of its negative interest rate policy, the agency reported. Kyodo News business report on March 19.
The dollar rose about 1 yen after the Bank of Japan’s widely expected decision, which marks a major shift away from the central bank’s powerful monetary easing policy that has been in place for 17 years, although the bank noted that it is expected to accommodative conditions remain in force.
The result was within market expectations: The yen weakened as the Bank of Japan signaled its intention to maintain an accommodative policy, said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management Co.
At 3 pm, the dollar was trading at 150.30-31 yen, compared with 149.09-19 yen in New York and 149.12-14 yen in Tokyo at 5 pm on Monday.
The euro was trading at 1.0863-0867 dollars and 163.27-34 yen compared to 1.0867-0877 and 162.08-18 yen in New York and 1.0892-0893 and 162.43-47 yen in Tokyo late Monday night.
The bonds were in demand after the Bank of Japan said it would continue buying government bonds “broadly in the same amount as before.” The yield on Japan’s 10-year government bond briefly fell 0.030 percentage points from around 0.725 percent on Monday.
In its first rate hike in 17 years, the Bank of Japan decided to limit short-term interest rates to a range of zero to 0.1%, believing that its goal of achieving stable inflation of 2 percent “is not very far”.
The bank also decided to end its yield cap program, which kept long-term interest rates at extremely low levels, and stop purchasing assets such as exchange-traded funds.
Source: Rossa Primavera
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