Japanese Yen outperforms amid hawkish BoJ prospects

Japanese Yen Price Today

The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the Canadian Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.09%	-0.08%	-0.14%	0.14%	0.02%	0.00%	-0.14%
EUR	0.09%		0.00%	-0.02%	0.23%	0.08%	0.00%	-0.05%
GBP	0.08%	-0.00%		-0.02%	0.22%	0.08%	-0.00%	-0.06%
JPY	0.14%	0.02%	0.02%		0.26%	0.13%	0.03%	-0.01%
CAD	-0.14%	-0.23%	-0.22%	-0.26%		-0.13%	-0.23%	-0.26%
AUD	-0.02%	-0.08%	-0.08%	-0.13%	0.13%		-0.07%	-0.11%
NZD	-0.00%	-0.00%	0.00%	-0.03%	0.23%	0.07%		-0.06%
CHF	0.14%	0.05%	0.06%	0.01%	0.26%	0.11%	0.06%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).

A Reuters report has shown in the European trade that sources have said that the central bank will hike interest rates this month. The report also showed that the BoJ is leaning towards pausing or slowing the pace of its bond-buying taper from Fiscal 2027.

On Wednesday, BoJ Governor Kazuo Ueda also said, “Our basic stance is to continue raising policy rate in accordance with economic, price, and financial developments.”

Meanwhile, the overall market sentiment remains cautious as negotiations between the United States (US) and Iran are failing to get a decisive breakthrough.

During the press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades slightly lower to near 99.40, but is close to its over eight-week high of 99.55 posted on Wednesday.

Going forward, the US Dollar will be influenced by the US Nonfarm Payrolls (NFP) data for May, which will be released on Friday. Investors will pay close attention to the US NFP data to get fresh cues regarding the Federal Reserve’s (Fed) monetary policy outlook.

Bank of Japan FAQs

What is the Bank of Japan?

The Bank of Japan (BoJ) is the Japanese central bank, which sets monetary policy in the country. Its mandate is to issue banknotes and carry out currency and monetary control to ensure price stability, which means an inflation target of around 2%.

What has been the Bank of Japan’s policy?

The Bank of Japan embarked in an ultra-loose monetary policy in 2013 in order to stimulate the economy and fuel inflation amid a low-inflationary environment. The bank’s policy is based on Quantitative and Qualitative Easing (QQE), or printing notes to buy assets such as government or corporate bonds to provide liquidity. In 2016, the bank doubled down on its strategy and further loosened policy by first introducing negative interest rates and then directly controlling the yield of its 10-year government bonds. In March 2024, the BoJ lifted interest rates, effectively retreating from the ultra-loose monetary policy stance.

How do Bank of Japan’s decisions influence the Japanese Yen?

The Bank’s massive stimulus caused the Yen to depreciate against its main currency peers. This process exacerbated in 2022 and 2023 due to an increasing policy divergence between the Bank of Japan and other main central banks, which opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ’s policy led to a widening differential with other currencies, dragging down the value of the Yen. This trend partly reversed in 2024, when the BoJ decided to abandon its ultra-loose policy stance.

Why did the Bank of Japan decide to start unwinding its ultra-loose policy?

A weaker Yen and the spike in global energy prices led to an increase in Japanese inflation, which exceeded the BoJ’s 2% target. The prospect of rising salaries in the country – a key element fuelling inflation – also contributed to the move.