??Yen Plummets Against Dollar as Bank of Japan Holds Rates!

The yen plummeted to its lowest level against the U.S. dollar in three decades following the Bank of Japan's decision to maintain interest rates on Friday. This move left traders anxious about the potential timing and extent of intervention by Tokyo authorities.

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Immediately after the announcement, the yen (USDJPY) experienced a 0.2% decline, weakening to 156.1 per dollar. Additionally, the yen depreciated to its lowest level against the euro (EURJPY) in almost 16 years, reaching 167.38, and to its weakest point against the Australian dollar (AUDJPY) in nearly a decade.

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The Bank of Japan opted to keep its short-term interest rate target at 0-0.1% and projected inflation to hover around 2% over the next three years. As market expectations had anticipated no policy changes, reactions were relatively subdued. Attention now turns to Governor Kazuo Ueda's tone and outlook during his scheduled news conference at 3:30 p.m. in Tokyo (0630 GMT).

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The yen's significant 9% decline against the dollar this year marks the largest drop among G10 currencies. This decline has primarily been propelled by the substantial gap between U.S. and Japanese government bond yields, exceeding 375 basis points at the 10-year tenor (JP10US10=RR). Despite surpassing key levels at 152 and 155 against the dollar, where traders had been cautious of potential pushback or intervention from Japan, markets remain vigilant for any official purchasing activities.

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Japanese Finance Minister Shunichi Suzuki stated on Friday that he is closely monitoring currency movements and is prepared to take appropriate measures in response. Elsewhere, the dollar experienced a slight decline due to softer-than-expected U.S. growth data, even as Treasury yields increased following a hotter-than-expected inflation indicator.

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