📘 BOJ Governor Ueda’s Press Conference Concluded, Yen Weakness Accelerates Further

📘 BOJ Governor Ueda’s Press Conference Concluded, Yen Weakness Accelerates Further

— Dovish Undertone Lingers After Rate Hike, Fueling Yen Selling on “Buy the Fact + Disappointment” —

■ Market Summary

BOJ rate hike and press conference pass without incident, triggering renewed yen selling

At today’s Bank of Japan Monetary Policy Meeting, the BOJ raised its policy rate to 0.75%, exactly in line with market expectations.
With the rate hike itself already fully priced in, market attention shifted entirely to Governor Kazuo Ueda’s press conference.

However, the press conference delivered no hawkish surprises:

• No concrete guidance on the timing or number of additional rate hikes

• Continued caution regarding any explicit reference to the neutral interest rate level

• Reiteration of the long-standing stance of “carefully assessing economic and price developments”

As a result, once the press conference concluded, markets reacted with a “sell-the-fact plus disappointment” response, and yen selling accelerated sharply.

■ Yen Moves: Yen Weakness Becomes More Pronounced After the Press Conference

As markets digested the press conference, yen selling gathered momentum:

• USD/JPY surged into the low 157s

• EUR/JPY settled firmly in the 184 area

• GBP/JPY broke above 210

The picture is now clearly one of broad-based yen weakness.

Market interpretation has been consistent:

• “The BOJ hiked, but the future policy path remains unclear”

• “Aggressive or rapid tightening is unlikely”

As a result, the simplistic notion of “rate hikes equal yen strength” has been decisively rejected by the market.

■ Why Yen Weakness Persists: Key Factors

The acceleration in yen depreciation can be attributed to the following:

✔ The rate hike was fully priced in
✔ The press conference avoided commitment on the pace of future tightening
✔ Large interest rate differentials versus the U.S. and Europe remain intact
✔ Event risk disappeared after the meeting
✔ Fresh yen shorts were added ahead of the weekend

In short, yen selling based on post-hike reality outweighed any expectations of yen appreciation tied to the rate hike itself.

■ London Session: Yen Selling Continues

Yen selling showed no signs of abating during the London session:

• USD/JPY remained elevated in the 157 range

• JPY crosses continued to trade firmly across the board

Both short-term traders and offshore accounts appear to agree that there is little incentive to buy back yen at current levels.

■ Looking Ahead: How Much Yen Weakness Will Be Tolerated?

In the very near term:

• The BOJ event risk is now behind the market

• Thin liquidity conditions heading into the weekend and year-end

may temper the pace of further gains.

However, as long as:

• U.S. yields remain elevated, and

• The BOJ maintains a dovish policy bias

the underlying trend of yen weakness is unlikely to reverse easily.

Key points to watch going forward include:

• Developments in U.S. interest rates

• Potential reactions from the Japanese government and Ministry of Finance to FX levels

• The direction of year-end position adjustments

■ Key FX Levels (Post-Press Conference)

• USD/JPY: Around 157

• EUR/JPY: Around 184

• GBP/JPY: Around 210

✍ Closing Comment

With the BOJ rate hike and Governor Ueda’s press conference now behind us,
markets have delivered a sober assessment of post-hike Japan.
Unless a clear roadmap for further tightening is presented,
the yen is likely to remain a currency that is easier to sell than to buy.
While short-term corrections are possible, the broader yen-weakening trend is unlikely to end quickly.