By Investing.com– The Japanese yen weakened beyond the significant 155 mark against the U.S. dollar on Thursday after the country’s central bank kept interest rates unchanged.
The Bank of Japan kept its short-term policy rate unchanged at 0.25%, as policymakers remained cautious over Japan’s economic outlook and the path of inflation.
The yen weakened against the U.S. dollar with the USD/JPY pair, which gauges the amount of yen needed to buy one dollar, rising 0.3% to 155.36 yen, its highest level since November 21. The pair had risen 0.9% on Wednesday following hawkish signals from the Federal Reserve.
Currency strategists closely monitor the 155 level in the dollar-yen pair, viewing it as a potential tipping point for verbal intervention by Japanese authorities. A further slide in the yen could amplify calls for the BOJ to consider raising interest rates.
Markets were divided before Thursday’s decision, as some analysts anticipated a 25-basis-point hike due to recent indications of growing inflation in Japan. Expectations of a rate hike had diminished in recent weeks.
The focus now was on BOJ Governor Kazuo Ueda’s press conference at 0630 GMT to explain the policy decision.
Analysts see the central bank likely raising rates in the coming months, with a hike coming as soon as January or March.
Earlier in the global day, the U.S. Federal Reserve lowered interest rates by 25 basis points but signaled a slower pace of rate cuts for next year.
The US Dollar Index rose 0.1% in Asian trade on Thursday, and was at an over two-year high.
