JEQ - Japan's yen hits weakest level in three decades as BOJ keeps interest rate unchanged as expected

2024-04-26 02:28:05 ET

• The Japanese yen weakened down to a fresh 34-year low past 156 to the dollar, breaching that level for the first time since May 1990 as the Bank of Japan held interest rates steady despite pressure from a sharply falling currency, as widely expected.
• Meanwhile, the BOJ revised its inflation forecasts higher and said the economy will likely keep growing at a healthy pace.
• The Bank of Japan kept its key short-term interest rate unchanged at around 0% to 0.1% at its April meeting. The decision came in line with the market expectations.
• In March, the central bank hiked rates for the first time since 2007, ending Japan’s negative interest rate era that began in 2016.
• The central bank also said it will continue to conduct bond purchases, in line with the March decision. Friday's statement scrapped a reference that the BoJ had purchased about JPY 6 trillion per month in the past.
• In a quarterly outlook, the committee revised higher CPI prints for FY 2024 to 2.8% from January's projections of 2.4%, due to the waning effects of higher import prices and fewer government support measures.
• For 2025, the board expects core inflation to hit 1.9%, slightly higher than its earlier estimates of 1.8%, reflecting a recent rise in oil prices.
• On the GDP front, policymakers cut their 2023 growth forecast to 1.3% from 1.8%.
• For FY 2024, the bank also slashed its GDP outlook to 0.8% from 1.2%, mainly reflecting lower private consumption.
• The yen has lost 10% against the dollar this year due to near-zero BOJ rates, prompting traders to borrow and invest in higher-yielding currencies.
• Markets continued to watch for signals from Japanese authorities on whether they would intervene in the currency markets again to arrest the yen’s slide.
• ETFs: ( JEQ ), ( EWJ ), ( DXJ ), ( FXY ).
• Japan's Nikkei 225 ( NKY:IND ) rose 0.7% to around 37,541 points on Tuesday, rising for the second straight session.

• ( USD:JPY ) is trading at 155.983.

• More on Japan...

  • Japan's manufacturing activity rises to 49.9 in April; services PMI rises to 11-month peak

  • Japan's inflation ticks lower to 2.7%, meeting expectations

  • Japan’s trade balance swings to surplus in March as exports surge

  • Japan's producer prices up 0.8% in March, rise the most in five months

  • Japan's central bank hikes interest rate after 17 years, scraps yield curve control

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