Japanese yen weakens as Bank of Japan makes no changes to yield curve range

The Japanese currency weakened against the U.S. dollar after the Bank of Japan surprised markets by keeping its yield curve tolerance band unchanged.

The Japanese yen weakened 2.04% against the U.S. dollar shortly after the decision was announced and last stood at 130.35, hovering at its strongest levels since June, 2022.

“Japan’s economy is projected to continue growing at a pace above its potential growth rate,” the Bank of Japan said in a statement. The central bank left its interest rate unchanged at an ultra-dovish -0.1% – in line with expectations and maintaining the same rate it’s kept since 2016.

The decision to make no changes to its monetary policies comes after the central bank caught global markets off guard in its previous meeting by widening its tolerance range for the yield on its 10-year government bond from 25 basis points to 50 basis points in December.

Since the move last month, 10-year JGB yields have exceeded the upper ceiling several times.

The yield on the 10-year JGB exceeded the upper ceiling of its band for a fifth straight session on Wednesday morning and last stood at 0.507%.

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