On Thursday, the Japanese yen maintained its recent decline at around 156.5 per dollar as the Bank of Japan kicked off its two-day policy meeting.
Yen steady ahead of BOJ rate hike, strong exports
The central bank is expected to raise its policy rate to 0.5% on Friday, marking the highest short-term borrowing costs in 16 years. BOJ Governor Ueda recently indicated that rate hikes would be considered if the economy remains strong. Deputy Governor Himino pointed out that it would be unusual for interest rates to remain negative once Japan moves beyond deflationary pressures. Meanwhile, data showed Japanese exports surpassed expectations in December, with imports also showing positive growth.
Yen faces downward pressure as US policies spur inflation
Globally, the yen may face further downward pressure from the dollar, as US President Donald Trump’s America-first, pro-growth policies are anticipated to drive inflationary pressures in the US.
