(Bloomberg) -- The Bank of Japan is widely expected to leave its benchmark interest rate unchanged Friday, with investors focusing on any hints of a less...
-- The Bank of Japan is widely expected to leave its benchmark interest rate unchanged Friday, with investors focusing on any hints of a less dovish tilt as the yen trades around a 34-year low.Governor Kazuo Ueda and his fellow board members are set to keep the short-term rate around 0% to 0.1% at the end of their two-day policy meeting, after the central bank called time on its massive monetary easing program last month, according to all but one of 53 surveyed economists.
“The risk is rising for a front-loading of a rate hike in June or July,” said Ryutaro Kono, chief Japan economist at BNP Paribas SA. “The yen is likely to keep falling gradually,” as the government views intervention as insufficient to shift the tide in light of strong US economic data and escalating geopolitical risks in the Middle East, he said.Japan’s finance minister reiterated warnings against excessive currency moves during an appearance in parliament Tuesday.
Bets by leveraged funds and asset managers on yen weakness increased to more than 173,000 contracts through April 16, the most on record in Commodity Futures Trading Commission data going back to 2006. It’s also the biggest short position among nine major currencies, according to Bloomberg calculations, making the yen vulnerable to a snapback, should the direction change.
“If underlying inflation continues to go up, we would be very likely raising interest rates,” Ueda said in a speech last week in Washington. Any move by the BOJ aimed at buoying the yen could be overshadowed several hours after the policy announcement, with the US set to release the Federal Reserve’s preferred inflation gauge at 9:30 p.m. Tokyo time. Next week, Fed chair Jerome Powell will take center stage as the US central bank concludes its meeting on May 1.
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