Yen Jumps By Most In Nearly A Year
The Japanese yen surged to its highest level in nearly a year on Monday, as investors bet that the Bank of Japan (BOJ) could soon shift its monetary policy.
Yen Strengthens Against Dollar
The yen strengthened against the U.S. dollar, rising 0.7 percent to 106.20 yen per dollar. This marked the biggest one-day gain since January 2020. The yen also rose against the euro, climbing 0.5 percent to 118.30 yen per euro.
BOJ Expected To Shift Monetary Policy
The yen’s surge came as investors bet that the BOJ could soon shift its monetary policy. The central bank has been keeping interest rates low and buying government bonds to stimulate the economy. However, some analysts believe that the BOJ could soon start to reduce its bond purchases, which would lead to a stronger yen.
BOJ Meeting To Be Closely Watched
The BOJ is scheduled to hold its next policy meeting on December 18th. Investors will be closely watching the meeting for any signs of a shift in policy. If the BOJ does decide to reduce its bond purchases, it could lead to a further strengthening of the yen.
Yen Strengthens Despite Weak Economy
The yen’s surge comes despite Japan’s weak economic performance. The country’s economy shrank by 3.9 percent in the third quarter of 2020, the biggest contraction since 2009. The weak economy has been caused by the coronavirus pandemic, which has led to a sharp decline in consumer spending and business investment.
Yen Strengthens On Safe-Haven Demand
The yen has also been strengthening due to safe-haven demand. Investors have been buying the yen as a safe-haven asset amid rising geopolitical tensions and economic uncertainty. The yen is seen as a safe-haven currency because it is seen as a relatively stable currency in times of market volatility.
Yen Could Strengthen Further
Analysts believe that the yen could strengthen further if the BOJ does decide to reduce its bond purchases. The yen could also strengthen if investors continue to seek safe-haven assets. However, the yen could weaken if the BOJ decides to keep its monetary policy unchanged or if the global economy starts to recover.
Conclusion
The Japanese yen surged to its highest level in nearly a year on Monday, as investors bet that the Bank of Japan could soon shift its monetary policy. The yen strengthened against the U.S. dollar and euro, rising 0.7 percent and 0.5 percent respectively. Investors will be closely watching the BOJ’s next policy meeting on December 18th for any signs of a shift in policy. The yen has been strengthening due to safe-haven demand and could strengthen further if the BOJ does decide to reduce its bond purchases.