20 December (Reuters) – The Bank of Japan has slightly loosened the shackles on its 10-year yield target and said it would review its yield curve control policy, surprise financial markets and send the yen sharply higher.
Here are some expert comments:
MOH SIONG SIM, CURRENCY STRATEGIST, BANK OF SINGAPORE:
“They’ve expanded the range, and I think that came sooner than expected. It begs the question whether this is a harbinger of more as far as policy normalization goes.
“It is written that the sharp yen weakness we’ve seen previously may have been uncomfortable for policymakers… it’s clear this adds to the story of yen strength over the next year.”
CHRISTOPHER WONG, CURRENCY STRATEGIST, OCBC, SINGAPORE:
“The timing of the policy change is a surprise, although we expected the move to occur in the second quarter of 2023.
“The adjustment may seem modest, but it is significant for a central bank that has long remained dovish. The implication is modest improvement from the large UST-JGB yield differentials…and a moderate to softer USD profile may lead to further downside in USDJPY.”
Reporting by Rae Wee and Ankur Banerjee in Singapore; Editing by Jacqueline Wong
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