Japanese Yen jumped as the BOJ decided to boost stimulus

The yen soared on Monday after the Bank of Japan boosted stimulus to help companies hit by the pandemic. The traders expected the BOJ’s decision to increase corporate debt buying and remove limits on its government bond purchases. Other major central banks have also released unprecedented amounts of monetary support to fight the crisis.

The yen rose to 107.28 per dollar today. It traded at 116.36 against the euro, close to its strongest in three years versus the common currency. The BOJ announced that it would increase purchases of commercial paper and corporate bonds as companies struggle with lost revenue.

Japan has urged businesses to close and encouraged people to stay at home the last month to slow coronavirus infections.

Takuya Kanda, general manager at Gaitame.com Research Institute in Tokyo, noted that it would be challenging for markets to latch onto the BOJ as it has already reached the limit of what it can do. It’s hard to differentiate from one currency to the next because every economy is suffering, and major central banks have eased policy a lot already.

However, now that the traders know about the BOJ’s decision, they shifted their focus to a U.S. Federal Reserve meeting, which is ending Wednesday. And there is a European Central Bank meeting scheduled on Thursday.

What about European currencies?

The ECB will probably extend its debt purchases to include junk bonds, which concerns some investors. Such a decision could widen rifts between members of the European Union.

Meanwhile, the pound jumped against the dollar and the euro on speculation that Britain will ease its lockdown this week. Against the euro, the sterling traded at 87.20 pence. Furthermore, Prime Minister Boris Johnson is returning to work after recovering from the COVID-19 infection.

The Australian dollar also gained 1% to $0.6462 as more than a million Australians downloaded an app to help trace close contacts of COVID-19 patients. On the other hand, the New Zealand dollar increased by 0.85% to $0.6070.