Yesterday, the Bank of Japan (BOJ) kept interest rates unchanged at 0.25%. Accordingly, this decision was made to assess the impact of the financial market and exchange rate on the Japanese economy and prices.
After the announcement, the yen decreased by 1.27% against the US dollar, reaching 156.77 JPY/USD. This is the lowest level in more than 4 months.
Many economists predicted that the BOJ would raise interest rates, but the decision to keep it unchanged was a surprise. In contrast, the US Federal Reserve (Fed) cut interest rates to 4.25%-4.5% a day earlier.
The BOJ's decision was passed with 8 votes in favor and 1 against. However, the BOJ believes that the Japanese economy is still unstable. The BOJ also found that businesses are raising wages and prices more than before. At the same time, the current exchange rate has a greater impact on prices than before.
BOJ Governor Kazuo Ueda warned that if the bank waits too long to raise interest rates, it will have to act more aggressively later. However, he said that current inflation is rising slowly, so the BOJ can adjust gradually.
Today, December 20, the yen recovered slightly after hitting a 5-month low. This was due to the higher-than-expected consumer price index (CPI) of Japan and a slight decrease in US bond yields.
New data showed that the CPI in November increased by 2.9% over the same period last year. The CPI excluding fresh food and energy also increased to 2.7%, higher than the previous month. This raises expectations that the BOJ could raise interest rates early next year. Governor Ueda also affirmed that the BOJ is ready to raise interest rates if the economy and prices continue to improve.
Meanwhile, US bond yields hit a 6-month high. This pushed up the value of the US dollar and put pressure on the Yen.
Investors are now waiting for data on the US personal consumption expenditure (PCE) price index. This is an important measure to determine the next trend of the USD/JPY pair.
According to Lao Dong, updated at 1:00 p.m. on December 20, the USD/JPY exchange rate is currently fluctuating around 156.902 USD/JPY, meaning 1 USD can be exchanged for about 157 JPY.
Update the latest Yen exchange rate HERE.
