New York, June 16 (BNA): The Japanese yen fell to a 15-year low against the euro on Friday after the Bank of Japan (BOJ) kept interest rates ultra-low and expected inflation to slow later this year, in contrast. . With the rate hike from the European Central Bank on Thursday.
According to Reuters, the Japanese currency also fell against the dollar, falling to its lowest level in six months.
As widely expected, the Bank of Japan maintained its short-term interest rate target of 0.1% and 0% on the 10-year bond yield set under the Yield Curve Control (YCC) policy.
“We expect inflation to moderate, but it is true that the pace of decline is rather slow. But we are still in the early stages of moderation,” said Kazuo Ueda, Governor of the Bank of Japan.
The yen fell broadly after the decision and hit a 15-year low of 154.88 per euro, setting for the biggest weekly decline against the single currency in three years. The Euro was last up 0.8% against the Yen at 154.73.
The dollar rose 0.8 percent against the Japanese currency to 141.37, after earlier touching its highest level since November.
“The yen has a large negative yield gap against other G10 currencies,” said Vasily Serebryakov, foreign exchange analyst at UBS in New York. “We will wait for the July 28th meeting where we think YCC is more likely.”
Elsewhere, the euro braced for its best week since June after the European Central Bank raised borrowing costs to a 22-year high and hinted at further rate hikes.
That and some weak US economic data saw the dollar fall broadly as traders cut their bets on how much higher US interest rates are needed.
The euro fell 0.1% to $1.0938 after touching a five-week high against the dollar, after jumping more than 1% on Thursday following a rate hike and future guidance from the European Central Bank.
European Central Bank President Christine Lagarde told a news conference that another rate hike in July was very likely and that the central bank still had “ground to cover” to fend off rising inflation.
The pound rose 0.3% to $1.2826 after rising to its highest level since April 2022 as traders similarly intensified their bets that the Bank of England is likely to raise interest rates for the 13th consecutive meeting next week.
The ECB’s monetary policy decision came a day after the Federal Reserve left interest rates unchanged, ending a streak of 10 consecutive interest rate increases. However, the Fed also indicated that borrowing costs may still need to rise by up to half a percentage point by the end of this year.
But recent data has the markets challenging that view as economic activity slows in the US and inflation eases.
For example, production at US factories nearly came to a halt in May as manufacturing suffered under the weight of higher interest rates, while US import prices similarly fell last month.
On Friday, data showed easing inflation expectations that lifted US consumer confidence to a four-month high in June. The survey’s reading of one-year inflation expectations fell to 3.3% this month from 4.2% in May. The five-year inflation forecast was little changed at 3.0%, and has remained within the narrow range of 2.9-3.1% for 22 of the past 23 months.
Against a basket of currencies, the dollar index rose 0.1% to 102.24 after falling to a five-week low on Thursday.
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