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Yen Near Record Low to Euro as BOJ’s Cautious Tone Tempers Rate Hike Impact

Investors saw little urgency for faster tightening, keeping downward pressure on the currency despite a new three-decade-high policy rate.

A Japan Yen note is seen in this illustration photo taken June 1, 2017. REUTERS/Thomas White/Illustration
Yen and U.S. dollar banknotes are seen in this illustration taken March 19, 2025. REUTERS/Dado Ruvic/Illustration
Japan's Vice Finance Minister for International Affairs Atsushi Mimura attends a Reuters NEXT Newsmaker event in Tokyo, Japan January 21, 2025. REUTERS/Issei Kato
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Overview

  • The Bank of Japan lifted its policy rate by 0.25 percentage points to 0.75% on Friday, the highest level in roughly 30 years.
  • Governor Kazuo Ueda reiterated a data-dependent approach, a stance that prompted selling of the yen and a bond selloff that pushed the 10-year JGB yield above 2% for the first time since 1999.
  • Japan’s top currency official Atsushi Mimura warned of action against excessive moves, but the caution did not produce a lasting market reaction.
  • The dollar traded around 157.56 yen and the euro around 184.51 yen, both near recent peaks, while the Aussie hovered near 104.20 yen.
  • IG’s Tony Sycamore said a clear break of 158 in dollar/yen could target January’s 158.87 high, and Commonwealth Bank of Australia projected Aussie/yen could reach 109 by March.