In the Asian session on Thursday (April 27), the US dollar fell against the yen, temporarily reporting 133.61, a decrease of 0.05%. The Bank of Japan is expected to keep monetary policy on hold on Friday as it may struggle to raise rates from ultra-low levels this year due to a weak economy.
“There is no reason for the BOJ to act this week as markets are jittery about global banking woes and recent data in Japan have shown a deterioration in business sentiment,” the economist said, adding that if the BOJ were to raise rates next year, it would have to do so in the next year. Only when the US and ECB start cutting interest rates to support the economy. The resulting interest rate differential could cause the yen to surge to around 115 per dollar from around 135 now, he said. Watanabe said it would be a question whether Japan could tolerate a stronger yen, and whether the BOJ and government could explain to the public the need for such a move.
