The Japanese yen touched an 18 month high against the US dollar yesterday when it reached the level of 105.54, before retracing to higher levels above 106.00. This sharp rally for the yen started last Thursday when the Bank of Japan (BoJ) decided to hold steady on monetary policy at its scheduled meeting. The markets had geared up for some more quantitative easing, another interest rate decrease, or even a mixture of both.
When the BoJ made the announcement of no additional measures, the USDJPY dropped 250 basis points, or 2.24%, reaching 108.735 in the space of 5 minutes. The yen rally didn’t stop there as the USDJPY closed the day at 108.087. Friday saw the rally continue further as price dropped to 106.25. Yesterday the BoJ governor Kuroda stated that a high value of the yen was not a good thing for the Japanese economy and was not welcome, this may have caused the decline in the dollar to stop and reversed the market trend, although that may be only temporary.
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