Yen set for further gains in the year ahead

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JPY rebounds slightly as BOJ adjusts yield curve control

The Japanese yen strengthened following the Bank of Japan’s decision to tweak YCC policy settings to make it more flexible.

The BOJ is trying to separate today’s decision to increase the flexibility of its yield curve control (YCC) from any future decision to tighten monetary policy, as it remains unconfident about keeping inflation at its 2.0% target.

The pledge to maintain negative interest rates should help curb speculation of rate hikes for the rest of the year, easing upward pressure on yields and the yen.

Overall, developments are in line with our expectations, and we maintain our forecast for further JPY gains over the coming year.