The Japanese yen has hit a new 15-year low against the euro, following the latest rate decisions by the Bank of Japan (BOJ) and the European Central Bank (ECB). The BOJ’s decision to maintain its ultra-low interest rates, coupled with the ECB’s rate hike, has led to a significant shift in the forex market.
As anticipated, the BOJ upheld its -0.1% short-term interest rate target and a 0% cap on the 10-year bond yield under its yield curve control (YCC) policy. BOJ Governor Kazuo Ueda stated, “We expect inflation to moderate, but it’s true the pace of decline is somewhat slow. But we’re still in the early stages of the moderation.”
Following the BOJ’s decision, the yen fell broadly, reaching a fresh 15-year low of 154.70 per euro. This marks the yen’s largest weekly decline against the single currency in three years. The yen also fell 0.5% against the U.S. dollar to 141.02 yen.
In contrast, the ECB raised borrowing costs to a 22-year high and hinted at further rate hikes. This, along with some soft U.S. economic data, saw the dollar fall broadly as traders scaled back their bets on how high U.S. interest rates would need to rise.
The forex market trends show a clear shift in investor sentiment, with the yen’s 15-year low against the euro highlighting the impact of the BOJ and ECB rate decisions. As the global economy continues to navigate the challenges of inflation and economic recovery, these rate decisions will play a crucial role in shaping forex market trends.