Currency analyst

Why everybody should keep in focus the forthcoming BOJ meeting

Upcoming BOJ’s decision on interest rate haunts investors and traders. Senior lenders urge Bank of Japan (BOJ) to weigh up its monetary policy of low interest rate saying that it grossly curtails their lending income. This policy is facing ferocious criticism since the negative rates neither reflect on the country’s economic growth nor help to achieve long-cherished inflation rate of 2%.

Despite all this pressure and apparent failure of the BOJ’s monetary policy, the bank officials seem to be unable to decide this brainteaser. On the one hand, they cannot give up on their program of financial stimulation of the country’s economy. On the other hand, they face with constant nagging of Japanese financial institutions, crying over their shrinking margins. Mr. Haruhiko Kuroda, a current Governor of BOJ, has recently admitted that monetary policy of low interest rates does harm the Japanese financial sector and puts additional pressure on pension funds. That’s why the BOJ might be opposed to negative interest rates at the forthcoming meeting scheduled for the 21st of September. The BOJ will have to question the credibility of its current financial tools and introduce the new ones. Some economists from proven printing editions believe that the BOJ might be willing to smooth financial losses of the banks by reducing its purchases of longer-term bonds and buy more short-term ones. This decision, in its turn, has caused a tremendous sell-off in JPBs and put even more pressure on investors stricken by the Friday’s stock market downfall.

Japan Generic Govt 10 Year                                                                                                              


USDJPY Spot Exchange Rate 


But we encourage you to be positive, since there is a scope for profits on financial markets, if you play on the high volatility of the USD/JPY currency pair next week.

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