Yen hits new low after the BoJ keeps interest rates near 0%

Key points

• Japan's key interest rate remains between 0 - 0.1%
• USD/JPY is trading above 157.00 for the first time since 1990
• Anticipation of direct BoJ intervention grows
• JPY nears all-time highs against US dollar and euro

Bank of Japan holds interest rates at 0 - 0.1%

Despite swirling rumors of an unexpected rate hike, the Bank of Japan (BoJ) maintained a dovish stance in its latest meeting, keeping interest rates between 0 - 0.1% and making no changes to its monetary policy. This decision, perceived as inaction towards stabilizing their currency, led to a decrease in the value of the Japanese yen.

USD/JPY hits new high above 157.00

Following the BoJ's dovish announcement, the USD/JPY pair saw a significant rise, appreciating over 150 pips in just 12 hours and achieving new 34-year highs by surpassing the 157.00 mark. This movement underscores the impacts of central bank decisions on forex exchange rates.

USD/JPY price history

Intervention from the BoJ is still possible

As the USD/JPY pair continues its ascent, the likelihood of the BoJ intervening in the forex markets to curb the yen's rapid devaluation grows. Japanese financial authorities have expressed concerns over the yen's swift decline, hinting at potential market actions, reminiscent of their yen buybacks in 2022 to stabilize exchange rates. The question now becomes what occurrence will force the BoJ's hand — USD/JPY at 158.00?

How far can the Japanese yen fall?

With USD/JPY nearing all-time highs of 160.00 and EUR/JPY just short of its peak, speculation about the yen's floor intensifies. The GBP/JPY pair, however, offers the most room for movement towards its historical high of 250.00 from its current position around 196.00, indicating varying levels of pressure on the yen across different currency pairs.

How to trade Japanese yen

1. Open an account to get started, or practice on a demo account
2. Choose your forex trading platform
3. Open, monitor, and close positions on JPY pairs

Trading forex requires an account with a forex broker like IG. Many traders watch major forex pairs like GBP/USD and USD/JPY for potential opportunities based on economic events such as inflation releases or interest rate decisions. Economic events can produce more volatility for forex pairs, which can mean greater potential profits and losses as risks can increase at these times.

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