❗USDJPY slumps after BoJ meeting

Japanese yen is a mover today following Bank of Japan meeting. While the Bank left interest rates unchanged, as expected, it decided to review its yield curve control measure. BoJ widened band around target yield to +-0.50% from +-0.25%. Given that the Bank kept intervening at the upper limit of the band, the move essentially boosts market rates in Japan by up to 25 bp and can be to some extent seen as equivalent of a 25 bp rate hike. This is a huge and unexpected pivot from BoJ which has been sticking to its dovish policy in spite of rapid acceleration in inflation.

USDJPY slumped around 3% on the news and trades in the vicinity of 133.00 handle at press time. Asian indices as well as US and European index futures slumped as yen strengthened. Nikkei dropped 2.5% while DAX futures trade 1% lower.

USDJPY slumped below early-December lows after the BoJ decision and trades at the lowest level since mid-August 2022. Source: xStation5