New York (awp/afp) – The yen hit multi-month highs against many currencies on Friday, boosted by rising Japanese bond rates and Bank of Japan intervention in an attempt to calm the debt market.
At around 20:40 GMT, the Japanese currency appreciated by 1.29% against the greenback, to 127.88 yen to the dollar. It had previously reached 127.46 yen to the dollar, a peak in more than seven months.
It also recorded a 5-month high against the Swiss franc and a 9-month high against the Canadian dollar.
The Bank of Japan (BoJ) announced on Friday that it will increase its purchases of Japanese government bonds on the market on Monday.
The decision followed the jump in Japanese bond yields. The yield on Japanese 10-year government bonds rose to 0.57% on Friday, the first in more than eight years.
The 10-year rate has therefore gone much further, on the scale of the very tight Japanese market, than the limit set by the BoJ, ie 0.50%.
It has been more than six years since the institute decided to control the level of long-term interest rates in an attempt to promote economic activity and moderate inflation.
In late December on Tuesday, the BoJ took the market by surprise and announced that it would now let the 10-year Japanese government bond rate rise to 0.50%, versus 0.25% previously.
The central bank’s announcement was interpreted as the beginning of a new era, after a long series of ultra-accommodative monetary policies.
“The market is testing the Bank of Japan’s tolerance limits,” commented Bipan Rai of CIBC Capital Markets. A movement that “assumes that (the BoJ) may soon modify its rate control program again or put an end to it”.
On Tuesday, Japan’s Yomiuri Shimbun newspaper reported that officials at the institution were indeed considering making changes.
For Bipan Rai, nothing credits the thesis of a new reversal in the short term, “but the market plays into it”, he says, and bets against the dollar, already clearly weakened by the anticipations of the imminent end of the cycle of monetary tightening by the US central bank (Fed ).
The analyst expects nothing from the upcoming BoJ meeting on Tuesday and Wednesday, and sees no upheaval until spring, at best, after the term of the current Bank of Japan governor, Haruhiko Kuroda, ends. whose successor is not yet known.
Cours de vendredi Cours de jeudi 20H40 GMT 22H00 GMT EUR/USD 1,0831 1,0853 EUR/JPY 138,50 140,28 EUR/CHF 1,0031 1,0068 EUR/GBP 0,8852 0,8889 USD/JPY 127,88 129,25 USD/CHF 0,9262 0,9276 GBP/USD 1,2234 1,2210