The yen strengthened against the dollar following the Bank of Japan’s announcement that it held monetary policy steady as expected at the conclusion of its two-day policy meeting.
The dollar edged lower and was down about 0.3 percent to 113.46 yen. The euro lost about 0.2 percent to 126.04 yen.
While it was widely expected that the Bank of Japan would hold rates steady, the statement that was released today showed that the BoJ removed language from its statement that it would cut interest rates further into negative territory if needed, and said it would exempt money reserve funds from the negative rates policy. All eyes are now on BoJ Governor Kuroda’s post-meeting press conference at 0630 GMT.
On January 29, the BoJ surprised the markets by introducing negative interest rates. The dollar rose as high as 121.70 yen immediately after the BoJ’s announcement but has since lost more than 6 percent.
In other currencies, the euro edged up slightly to $1.1108, coming close to last week’s one-month high of $1.1218 hit after the European Central Bank policy meeting when ECB President Mario Draghi made comments suggesting further rate cuts were unlikely.
The Australian dollar was down 0.3 percent against the US dollar to trade at $0.7491. Minutes of the Reserve Bank of Australia’s March 1st meeting were released today and showed that low inflation would give it room to ease policy but only if needed.
The Federal Reserve now comes into focus as it begins its own two-day meeting today. The FOMC statement will be closely scrutinized on Wednesday. The Fed is expected to hold rates at this meeting but investors will watch for clues to see if future hikes are on its agenda.