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Below the quote on "Currency" by Heena Naik- Research Analyst - Currency, Angel One Ltd

The recent Bank of Japan Monetary Policy Statement dated 28th July 2023 was a major shock to investors and markets. The policy-setting committee kept the interest rates unchanged however raised the upper limit for the fixed-rate operations. It will offer to buy 10-year Japanese government bonds at 1.0 percent in fixed-rate operations from the previous rate of 0.5 percent.

Post the policy, markets reacted in a way where the Japanese Yen appreciated while Japanese equities plunged with benchmark Japanese bond yields jumping north. However, the Tokyo Stock Exchange's banking index rose on the prospect of a steeper yield curve, which would revive profit from lending. 

Amid growing concerns over the rising side-effects of prolonged monetary easing, the BOJ has been under pressure from investors to allow yields to rise all year, with wages and inflation rising. Data showed core consumer inflation in Japan's capital slowed in July but remained well above the central bank’s 2% target.

On the BoJ’s move, the Japanese Finance Minister refrained from commenting on the policy decision but was closely watching the Federal Reserve and other central banks' policy decisions. He said that he wanted to achieve wage rises that beat inflation.

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