USDJPY skyrocketed to its 20-year highs again after the BoJ’s meeting.
The Japanese Yen hit new bottom against the USD. The current quote for the instrument is 130.59.
The Bank of Japan has another meeting on Thursday and kept the basic parameters of its monetary policy intact. The benchmark interest rate remained at -0.1%, just as expected. However, the regulator’s overall tone was rather soft and pessimistic.
For example, the regulator said that it would offer to buy unlimited amounts of the bonds to defend an implicit 0.25% cap around its 0% target every market day.
At the same time, the BoJ keeps options open and may consider easing its monetary policy if necessary because of the coronavirus pandemic. Easing may happen if there are doubts about the market and corporate financing stability.
As usual, the Yen dropped in response to such “dovish” comments. Another factor that puts pressure on the Yen is the “greenback”.
The regulator’s inflation forecasts are quite interesting. The CPI for the FY 2022 was revised upwards to 1.9% from 1.1%, but for the FY 2023 and 2024 was expected to ease to 1.1%. As one can see, inflation is anticipated to rise in the short term. However, the regulator is not confident about the long-term perspective.
The JPY devaluation attracts a lot of the BoJ’s attention but not actions and measures. It means that the Japanese authorities are quite fine with the current situation.