Weak Yen Pressures Bank Of Japan Rate Decision

The Bank of Japan was widely expected to keep its ultra-low interest rates unchanged Friday but analysts say the tumbling yen is putting pressure on officials to act

Tokyo, (UrduPoint / Pakistan Point News - 26th Apr, 2024) The Bank of Japan was widely expected to keep its ultra-low interest rates unchanged Friday but analysts say the tumbling yen is putting pressure on officials to act.

With the currency at three-decade lows against the dollar, speculation has grown that authorities could intervene in forex markets to provide support for the first time since 2022.

A weaker yen pushes up the price of imported goods, so the BoJ could lift its inflation forecasts and potentially move away from its ultra-loose policies more quickly, according to analysts.

On Friday morning, the dollar bought 155.60 yen, having touched 155.75 the previous day -- its highest since 1990.

If the falling yen creates "an impact too big to be ignored, it means that in some cases a change in monetary policy will become possible", BoJ Governor Kazuo Ueda said last week.

Finance Minister Shunichi Suzuki warned Friday the government was "concerned" about the negative aspects of the weak yen, repeating that authorities will take "all possible measures" if necessary, Japanese media said.

The central bank ditched its negative interest rate policy in March as it announced its first hike in 17 years, giving a brief lift to the yen.

But officials also suggested there were no more increases on the immediate horizon, tempering the yen's gains.

The currency is among other global units that have fallen against the dollar as a series of above-forecast US inflation data dim hopes for Federal Reserve rate cuts.