The yen fell to a seven-year low on Monday after the Bank of Japan’s recent move to control bond yields underscored BoJ’s effort to loosen monetary policy.
- Following big declines against the US dollar, the yen dropped to ¥125 on Monday, breaching a level set in late 2015 and pushing traders to anticipate further drops.
- The immediate trigger of the Japanese Yen falling below ¥123 was the Bank of Japan preventing the yield on the benchmark notes from expanding past the central bank’s policy target.
- The offer emerges after the yield on the 10-year JGB reached 0.245 percent for the first time since January 2016, hitting the upper end of the band implied by the BOJ’s yield curve control policy to keep the rate around zero.
The offer signaled the BOJ’s dovish policy stance as the US Fed, and other developed market central banks become more hawkish.
JPYUSD down -1.59%