Japan interest rate hike doesnt help yen

Japan interest rate hike doesnt help yen

Story link: Japan interest rate hike doesnt help yen

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The Bank of Japan�s decision to raise interest rates to 0.5 percent, announced on Wednesday, did not help the yen gain any ground against global currencies. The Bank voted 8 to 1 to raise the rate by 25 basis points. In its comments accompanying the announcement, the bank said that future raises would be �very gradual�, leading analysts to believe that the rate will stay at 0.5 percent at least until elections in July. Some also said that the Bank�s decision was likely to send investors on another round of yen-financed carry trades.

In mid-afternoon trade in New York, the yen had dropped 0.6 percent to �236.20 in relation to sterling, while it dropped to a new record low of �158.80 versus the euro, a decline of 0.7 percent. The yen was also lower against the US dollar, dropping 0.9 percent to �121.

The greenback was helped by news that the US consumer price index was up more than had been expected in January. The dollar added 0.1 percent to $1.3130 versus the euro, while it gained 0.2 percent against both sterling and the Swiss franc, to $1.9520 and SFr1.2385 versus the Swiss franc.

Sterling dropped 0.1 percent versus the euro to �0.6730 after the minutes of the most recent Bank of England Monetary Policy Committee meeting. The minutes revealed that the committee voted 7 to 2 in favor of holding the UK interest rate at its current level of 5.25 percent.