The Japanese yen is up 3.42% against the U.S. dollar on Tuesday as the Bank of Japan surprised the world by deciding to allow the benchmark interest rate to rise to 0.5% from 0.25%. The Japanese central bank was one of the only banks worldwide to hold off on raising benchmark interest rates, as policymakers have kept the government bond yield rate close to zero since 2016.
Japanese Central Bank Lifts Rates for the First Time in 6 Years
During the last two months, there’s been a lot of discussion surrounding the Bank of Japan’s (BOJ) governor, Haruhiko Kuroda, as the BOJ chief will be replaced soon by a successor. Kuroda, however, shocked global markets on Dec. 20, when he detailed that the BOJ would allow Japan’s 10-year bond yields to increase to 0.5% from the previous upper limit of 0.25%.
The move follows the yield curve control mechanism the Japanese central bank introduced in Sept. 2016. The BOJ explained on Tuesday that the change aims to “improve market functioning and e
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