Yen Keeps Sliding as BoJ Rate Hike Fails to Boost Confidence
The Japanese Yen has continued its downward trend after the Bank of Japan's (BoJ) recent decision to raise interest rates. Despite the increase, which was the highest since 1995, two BoJ board members voted against it, citing low inflation and economic growth as reasons not to justify a hike.
Traders had been betting on further rate increases, but the split vote has made it harder for them to believe in another rise. This has led to a decline in the Yen's value, with the USD/JPY pair trading just below 157.50.
The BoJ's new rate of 1.25% is still lower than the Federal Reserve's (Fed) rate of 3.75-4.00%, which means the gap between the two interest rates remains the same as before. This has kept the Yen under pressure, with speculators cutting their bets on a stronger Yen.
Japan's Ministry of Finance has been buying the Yen during national holidays, when fewer people trade, making its purchases more effective in moving the price. The latest intervention was significant, with the ministry spending ¥15.4 trillion between July 30 and August 26, its largest monthly amount on record.