Bank of Japan is going to end the negative interest rate policie

3月1日

The Bank of Japan's consideration of terminating its negative interest rate policy signals a potential narrowing of the interest rate disparity between Japan and the US, possibly resulting in a short-term appreciation of the JPY.

Wage
However, Governor Ueda stresses that BOJ is closely monitoring the sustainability of inflation, particularly in light of wage growth dynamics set to unfold in April. Should Japan's upcoming spring wage negotiations yield extended pay increases beyond April.

A Reuters poll of economists suggests that over 80% anticipate the BOJ's potential decision to abandon its eight-year negative interest rate policy come April with an average gain of 135.

YCC is not a sustainable measure
BOJ is holding more than 50% of marketable Japanese Government Bonds has resulted in a drying up of Japanese Government Bonds(JGB) market liquidity

Possibility of intervene
In November 2023, Masato Kanda, the Ministry of Finance's chief currency official, underscored the readiness of the Bank of Japan (BOJ) to intervene should the yen experience further depreciation. This commitment to potential intervention was echoed by US Treasury Secretary Janet Yellen, who remarked that Japan's efforts to stabilize the yen would be deemed understandable if aimed at mitigating excessive volatility.

No Aggressive Rate Hike Should Be Expected
Japan's GDP was negative in Q3 and Q4 2023.

Weekly Chart of USDJPY show 150- 160 is a very important resistance, beyond 160, it about back to 1985, so if the BOJ is going to defend the JPY, rate hike and intervention is a must or risk a fast depression of Yen. Stochastic is entering overbought zone, If the gap between the rate between USD and JPY is going to close, expect the USDJPY to break above 160 in next cycle. but not this time.