The yen sank to 15-year lows against the euro: why the Japanese currency bled

The Japanese currency also depreciated to a six-month low against the dollar. As expected by the market, the Bank of Japan kept its short-term interest rate target at -0.1% and a 0% cap on 10-year bond yields, in line with its policy of Yield curve control.

“We expect inflation to moderate, although it is true that the rate of decline is somewhat slow. But we are still in the early stages of moderation,” said Bank of Japan Governor Kazuo Ueda.

The yen fell sharply after the decision, hitting a new 15-year low of 155.22 per euro and heading for its biggest weekly drop against the single currency in three years. The euro was then up 1.1% against the yen at 155.16.

The dollar also strengthened 1.1% against the Japanese currency, at 141,795 yen, having previously touched its highest level since November.

The euro was preparing to close its best week since June against the dollarafter the ECB raised borrowing costs to 22-year highs and hinted at further rate hikes.

This, coupled with bleak US economic data, sent the dollar falling across the board on Thursday as traders reduced their bets on what US interest rates should reach.

The euro was trading stable at $1.0940after it rose more than 1% on Thursday and hit a five-week high against the dollar on the rise of rates and ECB forecasts.

Against a basket of currencies, the dollar index was up 0.1% at 102.24, after falling to a five-week low on Thursday.

Sterling was up 0.4% at $1.2831, after reaching its highest level since April 2022, as traders also increased bets that the Bank of England is likely to raise interest rates for the 13th consecutive time next week.