The Japanese Yen weakened close to a one-month low against the Pound and slid against the US Dollar after the Bank of Japan maintained interest rates but boosted lending and hinted that more quantitative easing measures could be introduced to bolster the nation’s economy.
At the end of its monthly two-day policy meeting, the Central Bank said that its board members voted unanimously to keep the pace of its monetary easing unchanged, as widely expected. It also retained language from the previous policy statement that the economy continued “to recover moderately.” However, it also said it would “double the scale” of its programs lending to banks in order to stimulate loans and support the economy.
The plan to increase the Japanese monetary base by ¥60-70 Trillion for as long as necessary, until Japan achieves a stable 2% inflation target, was left unchanged
“The BOJ’s decision to stimulate the flow of money through extension and expansion of lending programmes was well received. That is boosting risk appetite and Yen selling,” said the head of forex at Sumitomo Mitsui Trust Bank Ltd. based in Tokyo.
More monetary easing is expected after a report released on Monday showed that the Japanese economy expanded less than forecast. At an annualized rate the economy grew by 1% well below expectations for a figure of 2.8%. On a quarterly basis the Japanese GDP expanded by 0.3%, below the 0.7% forecast.
The Yen is expected to see volatility on Wednesday as the Bank of Japan is due to release its monthly report.
Japanese Yen (JPY) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound Sterling,
,Japanese Yen,170.650,
Euro,,Japanese Yen,140.3823 ,
US Dollar,,Japanese Yen,102.3896 ,
Australian Dollar,,Japanese Yen,92.2541 ,
[/table]
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