While the yen fell to its lowest level in over two years on Monday on expectations the traditionally conservative Bank of Japan (BoJ) will deliver on Prime Minister Shinzo Abe’s aggressive monetary policy pledge, experts fear markets may be over estimating the central bank’s next moves.
Foreign exchange strategists said the currency, which has weakened 13 percent over the past three months on hopes for bold action by the central bank, is at risk of a reversal in the near-term.
“The key is whether policy action really stands up to the rhetoric in terms of what the government is trying to get them (BOJ) to commit to. My fear is that the policy actions at this meeting and perhaps the next one (in February), will fall someway short of what is necessary,” Ray Attrill, co-head of forex strategy at National Australia Bank told CNBC on Monday.
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