Yen Falls Ahead of Policy Meeting

In the wake of a huge selloff during the Asian trading session, the Japanese Yen held close to a 2 ½ year low versus the U.S. Dollar as market players too their positions ahead of whatever bold steps the Bank of Japan might be coerced into taking at their upcoming monetary policy meeting. Some sources report that the central bank will mull over the Japanese government’s “suggestion” that the central bank step up its asset purchases program relentlessly until such time as a 2% inflation target is achieved. The Bank of Japan has thus far been able to maintain its independence to some extent, but analysts say that an endless wave of asset purchases would mark a significant turnaround of their conservative stance and more than exceed market expectations.

As reported at 12:16 p.m. (JST) in Tokyo, the USD/JPY pair was trading at 90.14, a level not reached since 2010; meanwhile the EUR/JPY pair touched on a 20-month peak when the pair struck 120.62 Yen. The AUD/JPY pair also hit a 4-year high when it touched 95.00 Yen. Analysts now fear, however, that the Bank of Japan’s actual decisions could disappoint and fall short of markets’ expectations; many wonder if the central bank will prefer to wait for the appointment of the new central bank governor and deputies which will occur in April.