BoJ Minutes Sound Dovish

BoJ Minutes Sound Dovish

The BoJ minutes from the Nov 19-20 policy meeting provided yet another excuse to sell the yen overnight. Monetary policy settings were left unchanged at that particular meeting but a dovish message came through loud and clear – exactly as one might expect in the lead up to last week’s decision which delivered another round of easing.

The key message for FX investors is that, having taken a mostly passive interest in the yen over the past few years, the policy board now seems willing to adjust its policy stance in a conscious effort to weaken the currency. For example, some board members noted that “it might be necessary for the Bank to improve its policy measures further to enhance the influence of monetary policy on foreign exchange rates.”

Another member suggested cutting the interest paid on excess reserves in a bid to “reduce the attractiveness of the yen as a safe-haven currency and exert influence on foreign exchange rates”.

So it would appear that the sands are shifting not just in Japan’s political arena, but amongst BoJ policy board members as well – after all, attempting to influence exchange rates has traditionally been the exclusive domain of Japan’s Ministry of Finance. USDJPY traded 84.73-85.38 overnight, putting the pair within striking distance of the April 6, 2011 intraday high of 85.53.