The yield on the ten-year Japanese Government bond, a reference for long-term interest rates, touched 0.705% on Monday, its highest level in almost ten years, specifically since January 2014. The long-term Japanese yield pla zo experiencing an upward trend since the Bank of Japan (BoJ) decided in July to provide it with greater upward flexibility, which already then shot up the reference to its maximum since June 2014, when interest touched 0.605%, after which it has continued to rise.
The BoJ currently applies yield curve control as part of its monetary policy, which guides long-term interest rates to zero, of course, although with some room for maneuver. At its July meeting, the credit institution effectively raised the upper fluctuation range that it considers tolerable for these yields from 0.5% to 1%, as a measure to alleviate the negative effects of its ultra-flexible monetary measures in the current context of inflation and weakness of the yen.
Japanese central bank governor Kazuo Ueda has since flagged the possibility of more tightening soon. Ueda said in an exclusive to the Japanese newspaper Yomiuri published last weekend that it is possible that by the end of the year the entity will have what is necessary to make a decision on its monetary policy, triggering speculation about a potential rate hike to which it comes resisting.
The Japanese credit institution has reiterated that a rate increase must be supported by an increase in wages and stable prices, which at the moment is not appreciated in the archipelago. The BoJ currently applies negative short-term reference interest rates, contrary to the increases that have been affecting its main counterparts in Europe and the United States, a divergence that has motivated a strong depreciation of the yen with other currencies and even led to the Government. to intervene in the market.
The dollar closed the previous session at 147.81 yen, but the Japanese currency moved this Monday around 146 units per greenback after investors digested Ueda’s statements, which fueled their expectations of changes in the near future. .
