Monetary policy decision unsettles yen

Story link: Monetary policy decision unsettles yen

After a rise directly after an announcement from the Bank of Japan that it was tightening its monetary policy, the Japanese yen was flat to weaker on the day as analysts arrived at an interpretation of the Bank’s move that expects policy to remain accommodative for some time to come.

The yen’s first response to the new policy announcement was to gain 0.6 percent versus the US dollar to ¥117.10, but by later in the day the yen had fallen to ¥117.99 against the dollar, fractionally lower than where it started the day. The Japanese currency held flat at ¥140.57 in relation to the euro and at ¥204.83 versus sterling.

The US dollar did not seem to be affected by worse than expected data on the trade deficit, which hit $68.5 billion in January, strengthening slightly to $1.1916 against the euro and to $1.7361 versus sterling.

The New Zealand dollar was down yet again against the US dollar, dropping another 0.8 percent to $0.6502. The central bank in New Zealand said that it doubted it would ease monetary policy this year.

In Europe, the Swedish krona gained 0.4 percent to SKr9.4076 in relation to the euro on more favorable data on unemployment and industrial output. Meanwhile, the Swiss franc dropped 0.4 percent versus the euro, to SFr1.5657 on a suggestion from an analyst at UBS that it was losing its “safe haven” aura.