The Japanese yen fell sharply on Wednesday as the central bank kept interest rates ultra-low, surprising investors who had thought the bank would alter its yield curve control policy further.
On Wednesday, the value of the Japanese yen decreased by over 2.0% against the US dollar, settling at 131.45 per dollar. This was the largest one-day percentage drop since June.
Japanese Yen on early trade in Asia
Source: Refinitiv Datastream
At its meeting on Wednesday, the Bank of Japan kept its ultra-low interest rates at -0.10%, including the 0.5% cap on the yield on 10-year bonds.
The BOJ raised its 10-year rate cap to 0.5% from 0.25% last month, widening the range it would allow above or below its aim of zero. Since then, speculations have arisen that the central bank was planning to make more adjustments to its YCC policy.
Investors have failed as a result of the bank’s unanimous decision, leading them to believe that it will be some time before the central bank hikes interest rates.
The Nikkei 225 jumped 2.36% to 26,756.07 following the bank’s announcement.
