A Tokyo display showed the Japanese currency trading at 156 yen against the dollar on April 26, marking a 34-year low following the Bank of Japan's decision to maintain its current monetary policy after a two-day meeting on the same day. The central bank's focus remains on guiding the uncollateralized overnight call rate within the range of 0.0 to 0.1 percent, influencing commercial banks' loan rates to each other and the target for money market operations.
Investors reacted to the BOJ's decision by selling off the yen and purchasing the dollar, speculating that the interest rate differentials between Japan and the U.S. will not narrow in the near future. This led to the Japanese currency touching 156 yen against the dollar during trading in Tokyo, hitting its weakest level since 1990, and continued to decline to 156.80 yen versus the greenback during BOJ Governor Kazuo Ueda's subsequent news conference due to lack of definitive statements warning against further depreciation.
In response to the yen's weakening, Ueda stated at the news conference that the impact on inflation from the currency depreciation has been limited thus far, emphasizing that the central bank will monitor the situation closely to determine if adjustments to the monetary policy are necessary. The BOJ's quarterly report, released on April 26, projected an inflation rate of around 2 percent for five consecutive years through fiscal 2026, with the consumer price index expected to rise by 1.9 percent in fiscal 2026, offering revised upward forecasts for fiscal 2024 and fiscal 2025.