For the past year or so, China has been the usual suspect behind currency volatility. Step forward Japan.
Tokyo’s unprecedented decision to introduce negative interest rates on Friday may intensify concerns that global central banks are delving into a tit-for-tat currency devaluation fight, strategists warned.
By implementing negative rates and leaving the door open to sustained easing to boost inflation, the Bank of Japan (BOJ) is effectively weakening the yen against the greenback. The currency slipped as much as 2 percent to hit a one-month trough of 121.4 following Friday’s shock announcement and more short-term weakness is widely anticipated.