BOJ Shock Heralds Currency War Return as Yen Drops Most in Year
- Japan decision follows signals from ECB of further easing
- Negative rates are already deployed in the euro area
Weighing the Impact of Kuroda’s Negative Rate Move
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The yen dropped the most in more than a year after Bank of Japan Governor Haruhiko Kuroda unexpectedly adopted negative interest rates, risking another round of competitive devaluations.
The currency fell against all 16 of its major peers after Japan’s central bank voted 5-4 to apply an interest rate of minus 0.1 percent to current accounts held at the central bank. The surprise move prompted Morgan Stanley to remove its yen trading strategies for now, according to a research note from the bank.