AUDJPY 20th JANUARY 2023

20 Jan 2023

The fall in the yen exchange rate cannot be separated from the BoJ's move to maintain the yield curve control (YCC) policy at 0.5%. YCC is a BoJ policy that holds 10-year bond yields close to 0.5%. When the yield starts to move away from 0.5%, the BoJ will purchase bonds. The purchase means the BoJ is injecting liquidity into the economy. The policy was widened last December from 0.25%, which surprised market participants and became a 'plot twist'. But something similar did not happen again this week.