May 14, 2022
  • May 14, 2022

Forex movements reflect various factors

By on February 15, 2022 0

Reuters reported that Bank of Japan Governor Haruhiko Kuroda said on Tuesday that the central bank‘s offer to buy unlimited government bonds reflected his view that the recent rate hike long-term interest of the country was due to factors unrelated to its economy.

“We don’t plan to conduct such an operation frequently. We will do so as needed,” Kuroda told parliament, referring to the BOJ’s market operation on Monday aimed at capping the yield on Japanese government bonds (JGB ) to 10 years at its implied level. cap of 0.25%.

Kuroda said Japan’s economy and price situation warrant maintaining loose monetary policy.

Key Comments

Explain to his G20 counterparts Japan’s economic situation, seek to understand Japan’s monetary policy management.

The BoJ’s market operation yesterday had the desired effect, pushing the 10-year JGB yield down to 0.22% from nearly 0.25%.

The global economy is at a critical stage with a serious situation in Ukraine driving up oil prices.

The BoJ’s offer to buy unlimited JGBs to defend its rate target is a “powerful” tool, not something taken by other central banks.

The BoJ’s market action yesterday reflected its view that the recent rise in JGB yields was due to factors unrelated to the Japanese economy, such as rising interest rates overseas.

We do not intend to make unlimited bond bids too frequently, we will do so as needed.

Our current monetary framework seeks to balance the need to support the economy while mitigating the negative impact on banks, JGB market functions.

Forex movements reflect various factors, which are not solely driven by interest rate differentials between individual countries.

Our baseline forecast is for the Japanese economy, prices will gradually rise as rising real household income supports consumption,

A notable source of concern is the escalation of tensions over Ukraine, which could harm the global and Japanese economies if it pushes up the prices of oil, commodities,

The BoJ must discuss the exit strategy when inflation approaches 2%, to do so before that could mislead the markets.

What the Fed does now would offer clues for when the BoJ debates the details of the exit strategy.

USD/JPY Traders Await Russian Headlines

There has been no other impact on the yen so far that is otherwise driven by offshore influences in geopolitics. The odds of an imminent Russian attack on Ukraine were seen higher on Monday after President Volodymyr Zelenskiy urged Ukrainians to wave the country’s flags from buildings and sing the national anthem at the unison on February 16, a date that some Western media have cited as possible. start of a Russian invasion. The yen resumed an offer on sentiment. USD/JPY remains below 115.50.