BoJ's Policy Change Causes Market Reversal: Yen Gains, Bond Yields Increase

 

The Bank of Japan's (BoJ) aggressive monetary policy strategy, characterized by a negative interest rate of minus 0.1% and the management of bond yields through the acquisition of government debt, is playing a crucial role in providing global liquidity.

In the last 24 hours, there has been a significant change in sentiment on the markets, characterized by a sharp rise in bond yields and a fall in share prices. This turnaround is primarily due to comments made by Bank of Japan officials, which caused investors to increase the likelihood of the BoJ ending its negative interest rate policy.

At one point on Thursday, market forecasts indicated a 45% chance that the BoJ could raise interest rates this month, up from less than 4% at the start of the week. This change followed Deputy Governor Ryozo Himino's presentation on Wednesday in which he outlined scenarios for tightening monetary policy.

In response to these developments, the Japanese yen (USDJPY) rose by 1.8% against the dollar, reaching 144.55, its highest level in almost four months.