(Reuters) – The Bank of Japan has slightly loosened the shackles on its 10-year yield target and said it will review its yield-curve control policy, surprising financial markets and sending the yen sharply higher.
Here are some comments from experts:
MOH SIONG SIM, CURRENCY STRATEGIST, BANK OF SINGAPORE:
“They’ve widened the band, and I guess that came earlier than expected. It raises questions as to whether this is a precursor of more to come, in terms of policy normalisation.
“The writing’s on the wall that perhaps the sharp yen weakness that we’ve seen previously was uncomfortable for policymakers…it’s clear that it adds to the yen strength story next year.”
CHRISTOPHER WONG, CURRENCY STRATEGIST, OCBC, SINGAPORE:
“The timing of the policy tweak is a surprise, though we have been expecting the move to come in 2Q 2023.
“The tweak may seem modest but is significant for a central bank that has held dovish for a long time. The implication is modest improvement from wide UST-JGB yield differentials…and a moderate-to-softer USD profile can lead to further downside in USDJPY.”
(Reporting by Rae Wee and Ankur Banerjee in Singapore; Editing by Jacqueline Wong)