2024-03-19 19:48:14
The Japanese currency fell during trading on Tuesday to its lowest levels in four months once morest the US dollar following the Bank of Japan’s decision to raise interest rates, and ahead of the Federal Reserve’s decision on monetary policy.
In a historic step, the Bank of Japan announced the abandonment of eight years of negative interest rates, and decided to raise the main interest rate to a range between 0 and 0.1 percent, which is the first increase in 17 years despite the change in inflation rates.
The yen’s decline confirmed the continued pressure on the Japanese currency once morest its American counterpart, as the differences in interest rates between Japan and the United States are still huge, and the American interest rate now stands at the range of 5.25-5.5 percent.
The US dollar rose once morest the yen by 1.28% to 150.90 yen, according to Refinitiv data, recording its highest levels since November 2023.
Bank of Japan Governor Kazuo Ueda indicated in a press conference following the decision that the bank does not care much regarding the movements of the local currency in the short term, but he pointed out the bank’s readiness to change monetary policy if these movements significantly affect price rates or economic growth.
As for Japanese stocks, the Nikkei index rose at the end of the session by 0.66% to 40,003 points, near its highest levels ever, while the broader Topix index closed up by 1.06% at 2,750 points.
This comes one day before the Federal Reserve’s expected decision on US interest rates, amid financial market expectations that the bank will keep the interest rate unchanged in the range of 5.25-5.5 percent.
Investors are also awaiting the economic outlook report, in which the Federal Reserve announces expectations for growth, inflation, and interest rates over the next two years, in order to assess interest rate expectations among global central banks.
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