The Japanese yen ended the day up across the majors as persistent risk aversion also weigh on the stock markets, with the Dow Jones Industrial Average slumping 1.28 percent. However, it is worth noting that the yen remained well below the record highs reached yesterday, suggesting that a top could be forming. Last night, the Bank of Japan (BOJ) left rates unchanged at 0.10 percent as expected, and their subsequent Statement on Monetary Policy didn’t reveal much in the way of new information. The statement noted the sharp slowdown in the economy and the dismal prospects for growth going forward as the BOJ expects to fall back into deflation this year. Meanwhile, we saw a bit of jawboning of the Japanese yen, as Vice Finance Minister for International Affairs Naoyuki Shinohara said that they were “closely monitoring movements in the currency market” while BOJ Governor Masaaki Shirakawa mentioned that the currency’s gains were negative for Japanese exporters and the economy in the short term. Nevertheless, there is still potential for Japanese officials to step up verbal intervention efforts or even physically currency intervention if the Japanese yen strengthens further.
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