Japanese Currency Falls as Traders Pare Back Rate Hike Bets | WION World Business Watch

Japanese Currency Falls as Traders Pare Back Rate Hike Bets | WION World Business Watch

The Japanese yen fell sharply after the Bank of Japan held interest rates steady and delayed its inflation target timeline. The BJ now expects to reach its 2% inflation goal around fiscal 2027, extending the horizon by a year. It also harved its economic growth forecast for the current fiscal year, signaling rising caution. This dovish shift led traders to unwind long yen positions and pull back expectations for further monetary tightening. According to the US Commodity Futures Trading Commission, speculative net long positions on yen had recently climbed to a record high, making the currency vulnerable to a sharp reversal. With the BOJ sounding less confident than in March, the odds of a rate hike by year end have dropped from nearly 100% in early April to just 36% based on overnight index swaps. Traders now expect the yen to weaken further, possibly reaching 147 per dollar in the coming weeks, especially ahead of Japan’s holiday period. The end’s decline extended after US manufacturing data showed the sharpest contraction in output since 2020, boosting demand for the dollar. BOJ governor maintained that rate hikes are still possible, but his less assertive tone added to market doubts. Some strategists now see gold and other commodities attracting safe haven flows, reducing the yen’s traditional appeal. The shift in the BOJ’s narrative from domestic inflation to trade related risk has reinforced the market perception of a doubbish central bank. [Music]

The Japanese yen fell sharply after the bank of Japan held interest rates steady and delayed its inflation target timeline.

#japan #bank #business

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