In European trade on Tuesday (Oct 25), / moved sideways to trade at 148.91, down 0.11%.
Japan’s financial markets are volatile and questions about the YCC’s policies are growing.
The market believes that the YCC policy was designed to combat and that the need to maintain it will decrease as Japan achieves its target of “above 2 per cent year-on-year growth and stability”.
The Bank of Japan kept easing, a sharp departure from the global trend of rising interest rates.
Cicc fixed income team believes that under the pressure of external shocks, the Japanese exchange bond market is under pressure, resulting in the loss of credibility of Japan’s YCC policy, policy maintenance is becoming more difficult.
“The BOJ may not abandon the YCC policy for the time being and the market and central bank stalemate will continue.”
Hu said the current rise in inflation in Japan is mainly driven by high energy prices and the depreciation of the yen. The BOJ is still not sure whether it has won the battle, and abandoning the YCC will become an option only when signals emerge that the deflation risk has passed.
Although USD traded slightly above Monday’s fresh 32-year high of 149.08 to 149.38 in JPY crosses (New York), the recent loss of upward momentum is likely to limit prices below 149.50 and generate a much-needed correction, with a move below 148.89(New York low) to 148.42/45.
