Greenback soars after BOJ changes policy framework
On Wednesday, the evergreen buck leapt after the Bank of Japan dared to alter its policy framework, and market participants bought back the American currency ahead of the outcome of the Fed’s policy gathering later in the trading session.
The US dollar edged up 0.8%, trading at 102.54 yen, having soared to a nearly one-week peak of 102.67.
Overhauling its massive stimulus program, Japan's major financial institution decided to scrap its focus on monetary base and set objectives for long-term rates.
The BOJ maintained the 0.1% negative interest rate applied to some of the excess reserves, which financial institutions park with the major bank.
However, it abandoned its base money objective and instead set a so-called yield curve control. Well, under this measure the BOJ will purchase long-term government bonds to keep 10-year bond revenues around current levels of 0%.
The monetary base was abandoned, that could be supportive for the greenback, as some financial analysts state.