The Japanese Yen fell to a record low against the Swiss Franc after the Swiss National Bank raised interest rates on Thursday. The Bank of Japan maintained its ultra-loose monetary policy last week, keeping interest rates unchanged.
The Japanese Yen fell to a record low against the Swiss franc as the monetary policy divergence between Japan and Switzerland increased and the Swiss National Bank hiked interest rates.
The Japanese currency fell to 159.15 per Swiss franc, breaking the record low since 1979.
The Swiss National Bank (SNB) ended the negative interest rate last year. While the SNB raised interest rates to 1.75 percent on Thursday, in line with expectations, the Bank of Japan maintained its ultra-loose monetary policy and kept interest rates unchanged last week.
The divergence in monetary policy is growing.
Sumitomo Mitsui Banking Corp. Chief strategist Daisuke Uno said: “The monetary policy gap between the Bank of Japan (BOJ) and European central banks is growing wider as the BOJ is more dovish than expected and European central banks are raising interest rates above expectations. European currencies are strengthening against the yen, and it is possible that the trend will accelerate further.”
On the other hand, it is seen as an important negative for the yen, which is traditionally seen as a safe currency, with Japan’s deficit for the 19th consecutive month in May. In Switzerland, on the other hand, the trade balance gives a surplus.
BOJ Chairman Kazuo Ueda said on Wednesday that the bank will continue quantitative easing to achieve its 2 percent price target in a sustainable and stable manner.
Ueda’s dovish statements put pressure against other new currencies, causing the Japanese currency to see its lowest level against the euro since 2008 and its weakest in seven months against the dollar.
If necessary, we will intervene again message.
On the other hand, Japanese officials, including Japanese Finance Minister Shunichi Suzuki, have warned that they are watching currency movements closely and are ready to take action if necessary, as they did at the end of last year.
At the time, the yen weakened to 146 per dollar, prompting Japan to make its first intervention since 1998 to strengthen its currency.
Societe Generale Strategist Kit Juckes commented on the Japanese currency, “The weak yen can only be reversed with a BOJ policy change or a drop in US yields. Our economists expect the BOJ to take action on yield curve control (YCC) in July. “Our rate strategists also think a drop in US bond yields is imminent, but until that happens, disappointment will remain.”