The Yen drops after BoJ policy decision

The Yen drops after BoJ policy decision

The yen advanced across the board and posted a three-week high against the dollar before the BoJ policy decision, as investors were betting that the central bank’s tendency to adopt tightening steps in the future. This, of course, pushed Japanese bond yields higher and supported the yen.

However the BoJ delivered only minor tweaks to its policy framework, disappointing those looking for a major hawkish turn. And as result the Yen give back most of the gains it had posted in recent days.

Overall, the BoJ made only minor adjustments aimed at enhancing its policy flexibility, and did not make significant adjustments, taking into account the weakness of inflation from one side, and in an effort to improve exports form the other. The higher the yen the less attractive the Japanese goods exported.