Yen falls to 15-year low against euro

The Bank of Japan (BOJ) kept negative interest rates and forecast slow inflation, causing the yen to depreciate.

After a two-day policy meeting, as expected, the Bank of Japan (BOJ) on June 16 kept its short-term interest rate unchanged at -0.1% and the 10-year bond yield cap at 0%. BOJ Governor Kazuo Ueda also expects inflation to “slow down” later this year. The country’s core inflation in April was 3.4%.

"As domestic and foreign economies and financial markets continue to face uncertainties, we will continue to patiently maintain monetary policy while remaining flexible in response to developments in macroeconomic, price and financial conditions," the BOJ said in a statement.

The news sent the yen tumbling to a 15-year low against the euro early this morning, at 155.2 yen per euro. This week was also the yen’s biggest weekly decline against the euro in three years.

Euro - yen developments over the past year.

The USD price also increased by 1.1% compared to the yen this morning, reaching 141.9 yen per USD - the highest level in the past six months. "The BOJ made the USD's rise stronger by keeping interest rates unchanged," said Erik Bregar - Director of Risk Management at Silver Gold Bull.

The euro also had its biggest weekly gain against the dollar since June, after the European Central Bank (ECB) raised interest rates to a 22-year high on June 15 and signaled further tightening. The ECB president said in a press conference later that they would raise rates again in July to curb high inflation.

The ECB's decision came a day after the US Federal Reserve (Fed) kept interest rates unchanged, ending a streak of 10 consecutive rate hikes. However, the Fed also signaled that it could continue to raise interest rates by another 50 basis points (0.5%) this year.

The pound also rose 0.4% against the dollar yesterday. It is now worth $1.28. Investors are betting that the Bank of England will raise interest rates for the 13th time in a row next week.

Ha Thu (according to Reuters)

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