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Japanese Yen Weakens As BoJ Intervenes To Defend Bond Yield Target

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The Japanese yen lost ground against its major counterparts in the Asian session on Monday, after the Bank of Japan intervened in the forex market to contain a spike in government bond yields above its target band.

The BOJ offered to purchase 10-year bonds in unlimited amounts to defend the yield target of 0.25 percent.

The intervention came after the yield on the 10-year bonds moved up toward the implicit 0.25 percent upper limit that was set around its 0 percent target.

The 10-year JGB yield has been moving up along with long-term treasury yields as the Federal Reserve plans to tighten monetary policy aggressively in the coming months.

The Fed’s policy stance is in contrast with the BoJ, which is expected to maintain ultra-loose monetary policy to support the economy.

Asian shares are mixed as investors weighed impact of a high inflation and tighter monetary policy on economy.

The yen depreciated to 123.66 against the greenback, a level unseen since December 2015. Should the yen slides further, 125.00 is likely seen as its next support level.

The yen declined to a 6-1/2-year low of 132.46 against the franc and near a 6-year low of 162.83 against the pound, off its early highs of 130.98 and 160.77, respectively. Immediate support for the yen is possibly seen around 134.00 against the franc and 164.00 against the pound.

The yen touched 6-1/2-year lows of 93.21 against the aussie and 99.13 against the loonie, down from its prior highs of 91.54 and 97.69, respectively. The yen is likely to find support around 96.00 against the aussie and 102.00 against the loonie.

The yen fell to 135.62 against the euro, its weakest level since February 2018. On the downside, 137.00 is possibly seen as its next support level.

The yen hit 86.14 against the kiwi, setting more than a 7-year low. The yen may locate support around the 90.00 level.

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