USD/JPY: An end to ultra-expansionary monetary policy is a double-edged sword for the Yen – Commerzbank
|Is it time to normalize the BoJ's monetary policy? Ulrich Leuchtmann, Head of FX and Commodity Research at Commerzbank, analyzes how the end of ultra-expansionary monetary policy could impact the Japanese Yen (JPY).
If the BoJ begins to exit in three weeks, JPY may initially benefit
For the Yen, an end to ultra-expansionary monetary policy is a double-edged sword: on the one hand, it means slightly higher JPY carry, but on the other hand, no higher carry in the long run.
In my view, this means that if the BoJ does indeed begin to exit in three weeks, this may initially have a positive effect on the JPY. However, this effect would be limited. At the same time, the chances of at least real (i.e. inflation-adjusted) positive real interest rates would decline.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.