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28 Apr 2022
Dollar Surges above 130 Yen while Euro Dips Below $1.05
The Index Today
On Thursday, the dollar soared above the psychological level of 130 yen for the first time since 2002. This comes as the Bank of Japan (BOJ) continues to reinstate its low yield policy, while the euro temporarily dropped below the $1.05 mark.
As per Reuters, even though there was some anticipation surrounding the BOJ potentially hiking interest rates due to soaring inflation, the central bank persisted with its earlier decision. This comes in stark contrast to the patterns of other central banks, including the U.S. Federal Reserve which is set to institute another rate hike of 50 basis points at its next policy meeting in May.
The Fed’s continual endorsement of maintaining a hawkish outlook has spurred the dollar to climb by as much as 130 yen, hitting a monthly high of 6.9% which is its best since late 2016.
Westpac Sydney’s Senior Currency Strategist Sean Callow said, "After weeks of confusing comments about the yen from government officials, the BOJ has cut through with a clear message - the global inflation surge is ex-Japan, so zero rates will remain." He added, “USD/JPY 130 may be a round number but it cannot be a red line, with attention likely to turn quickly to 135, the 2002 high."
"The yen is not being ignored, but it is mostly a side effect for the BOJ," Callow contended.