The Japanese yen gained today, rising more than 1 percent against the US dollar, even though the nation’s central bank made changes to its asset-purchase program. The changes were not that significant, though, explaining why the currency reacted positively to the news.
The Bank of Japan was holding its policy meeting during the Friday’s trading session. The central bank announced that it is going to start buying exchange-traded funds (ETFs) at the annual pace of ¥3 trillion and is going to extend the maturity of bonds it owns from 7–10 years to 7–12 years. Yet the overall size of asset-purchase program remained the same, meaning that monetary base will expand at the pace of ¥80 trillion annually.
Market participants considered the changes made by the BoJ to be rather negligible. Analysts argued that this shows unwillingness of Japanese policy makers to increase monetary stimulus. Such way of thinking is beneficial to the yen and explains today’s rally of the currency.
USD/JPY tumbled from 122.55 to 121.25 today. EUR/JPY dropped from 132.68 to 131.84, and its intraday low of 131.03 was the lowest since the huge jump on December 3, when the European Central Bank also disappointed the market with its policy announcement. GBP/JPY was down from 182.59 to 180.87.
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