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π₯ Time for Tough Decisions: will BOJ Save the Yen?β
π Yen fell nearly 6% against the US dollar in March, 5% this month, and will continue to depreciate if the divergence between BOJ and Fed intensifies. If tomorrow the monetary regulator maintains parameters of its too Β«softΒ» policy, then USD/JPY will have to look for a target in the 127-132 zone.
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The latest failed recovery attempt came after BOJ promised investors an unlimited supply of 10-year government bonds at 0.25%. Since the beginning of the year, the yield spread between 10-year US and Japanese bonds has doubled (to 2.7%) due to the growth of US indicators, which has sharply increased the attractiveness of US long-term bonds. In such circumstances, the yen should act as a shock absorber that increases the competitiveness of the economy.
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But the current calculation of USD/JPY rate is actively interfered with by the rise in prices for Japanese raw materials and energy imports. Now big capital prefers to leave the country and migrate either to the US or to countries with tighter monetary policies.
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Space above the 130 level is the historical zone of foreign exchange intervention, and above 140 rate was during the Asian debt crisis. It is unlikely that tomorrow BOJ will be able to offer serious arguments for a confident reversal of the yen. So far, regulator uses only verbal blackmail, but major players are already preparing to actively sell the dollar and buy the Japanese currency.
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Profits to yβall!