When the BOJ met this week, they decided not to change their policy in the face of immense market volatility. The Yen has been weakening recently after a long run of strength. The Japanese stock market was growing but dropped strongly recently as speculatory money withdrew. As of now, the BOJ will stick to their policy and plan, unchanged. BBC’s Rupert Wingfield-Hayes reported that it is similar to the famous saying “keep calm and carry”.
Japan’s plan, by the way, is to double their money supply in the next two years and hit their inflation target of 2%.
The USDJPY shot upward for over 6 months. Now, in the past few weeks it has retraced but, is also showing the possibility of being bullish again. The USDJPY is currently hanging around the 97.00-99.00 area. Whether or not a trend will be established, or continued in the near future is yet to be seen.
From last fall to this May, the Yen fell around 2500 pips against the United States Dollar. The Japanese Yen weakness in the Forex Market was thought to be caused intentionally by the Bank of Japan. Since Japan has an export-based economy, theoretically a weak Yen means more economic activity for Japan.
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