The BoJ was reported to have implemented a 0.25% rate hike, prompting yen selling. However, strong intervention concerns are expected to keep the yen's upside capped.
In the dollar-yen market, the BoJ was reported to have implemented the expected 0.25% rate hike. Although the market had already priced in the hike, the yen continued to come under selling pressure. The yen initially fell after the BoJ announced the rate hike, but intervention concerns took hold, making a sharp move toward yen appreciation unlikely. Its upside remains capped.
It emerged that 2 Policy Board members had voted against the rate hike, while neither the statement nor Governor Ueda Kazuo's (植田和男) press conference provided a clear outlook for the pace of future rate hikes. As a result, the market has continued to trade amid uncertainty over the timing of the next hike and the direction of the BoJ's monetary policy operations.
There were also reports that the BoJ had conducted a rate check, heightening concerns in the foreign exchange market over the risk of yen intervention. This is expected to restrain a sharp rebound in the yen, while making a one-way move in dollar-yen less likely.