BOJ Rates Shock Revives Currency War Fears

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.


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Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam