The Governor of BoJ briefly mentioned a somewhat hawkish stance last week, but there are no positive indications for today's yen exchange rate.

The Bank of Japan's policy announcement failed to catalyze the yen exchange rate in today's forex market (September 22nd). USD/JPY remains constrained within a narrow range below the 149.00 threshold until the end of the Asian session. The yen exchange rate also shows a subdued trend in other currency pairs.

USD/JPY

Japanese inflation data indicates a stable price increase above the Bank of Japan's 2 percent target. Core CPI inflation stood at 3.1% (year-on-year) in August 2023, the same as in July. However, the BoJ appears to be ignoring this report.

Earlier this morning, the Bank of Japan (BoJ) maintained its loose monetary policy in the interest rate announcement. The main interest rate remains at -0.10%, and the target yield for 10-year bonds remains within approximately +-50 basis points around 0.0%.

BoJ Governor Kazuo Ueda briefly mentioned a somewhat hawkish stance last week, but the BoJ is not yet ready to consider policy changes. As a result, USD/JPY is holding at its highest level since November 2022.

"Anyone positioning for something new from the BOJ today, in the form of a less accommodative slant towards monetary policy, has been sorely let down," said Joel Kruger, a currency strategist at LMAX Group.

"The yen is right back under pressure after the latest policy decision, which produced a familiar recipe for maintaining the status quo. This sets the stage for additional yen declines in the days and weeks ahead."

Instead of changing monetary policy, the BoJ highlights concerns about the weakening exchange rate. The BoJ's statement this morning emphasized the importance of "monitoring developments in the foreign exchange and financial markets and their impact on Japan's economic activity and prices."

The statement is not strong enough to encourage strengthening the yen's exchange rate but also hinders traders who want to push USD/JPY into a higher range. Market participants are again discussing the risk of Japanese currency intervention that could occur without prior warning. Some experts still consider the area above 150.00 the most vulnerable to intervention, although Japanese officials have never confirmed such speculation.