Yen Weakens Amid Speculation BOJ May Hold Key Policy Steady

The Japanese yen experienced a decline against the US dollar on Friday, following a Reuters report indicating that the Bank of Japan (BOJ) is likely to maintain its key yield control policy unchanged in the upcoming week, amidst a crucial series of central bank meetings involving the US and Europe.

Insiders familiar with the matter revealed that BOJ policymakers prefer to analyze further data to ensure continued wage and inflation growth before considering any policy adjustments. The report emphasized the lack of unanimity within the central bank, making the decision potentially a close call.

In response to the news, the dollar witnessed its most substantial one-day gain against the yen since April, rising 1.3% and reaching a nearly two-week high at 141.91. Prior to the report’s release, the dollar had seen a modest increase of approximately 0.3% against the yen.

The yen’s trade had been relatively subdued earlier, following data indicating Japan’s core inflation had risen to 3.3%, matching the median market forecast but staying ahead of BOJ’s 2% target. However, market speculations about a possible modification to yield curve control had persisted, especially since inflation had surpassed BOJ’s target for over a year.