The yen has depreciated against all major currencies following the Bank of Japan’s (BOJ) decision to hold steady its monetary policy. The BOJ’s commitment to its current stance reinforces market expectations that interest rates in Japan will remain exceptionally low for the foreseeable future.

This divergence in monetary policy between Japan and other major economies, where central banks are actively tightening monetary conditions to combat inflation, is driving the yen’s weakness. Investors are selling the yen in favor of currencies offering higher yields.

The BOJ’s Governor has repeatedly stated that the central bank will maintain its ultra-loose policy until it is confident that inflation is sustainably above its 2% target. However, this stance is increasingly at odds with global trends, placing downward pressure on the yen.