# Yen retreats after BOJ policy tweak sparked surge Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2022-12-22 Category: NEWS Category URL: https://financedigest.com/category/news Meta Title: Yen falls in choppy session after surprise BOJ policy tweak Meta Description: The yen slipped against the dollar after Bank of Japan's policy change. Expect volatility in dollar-yen pair due to Tuesday's massive move and thin URL: https://financedigest.com/yen-retreats-after-boj-policy-tweak-sparked-surgehtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2022-12-21t014640z1lynxmpeibk01drtroptp4japan-economy-yen-1736814694631-compressed.jpg) By Saqib Iqbal Ahmed NEW YORK (Reuters) -The yen fell in a choppy session on Wednesday, ceding some of the ground gained the previous day when a surprise policy tweak by the Bank of Japan lifted the Japanese currency by 4% against the dollar. The BOJ decided to change its “yield curve control” policy on Tuesday even as it kept broad policy settings unchanged. It is letting 10-year yields move 50 basis points either side of its 0% target, wider than the previous 25-basis-point band. On Wednesday, the [dollar was 0.4% higher against the yen](https://www.financedigest.com/yen-sinks-as-rates-outlook-diverges-nz-dollar-tumbles.html "Yen sinks as rates outlook diverges; NZ dollar tumbles"), having plunged 3.8% in the previous session, its largest one-day drop against the Japanese currency in 24 years. I think yesterday’s move was warranted but perhaps a bit outsized, so a slight pullback would be natural today,” said John Doyle, vice president of [dealing and trading](https://www.financedigest.com/indias-carmakers-back-zero-duty-on-limited-british-imports-under-trade-deal-sources.html "India’s carmakers back zero duty on limited British imports under trade deal – sources") at Monex USA. Given the size of Tuesday’s move in dollar-yen, [traders should expect the pair to be volatile](https://www.financedigest.com/analysis-traders-ready-for-wilder-swings-as-rate-rises-stoke-volatility.html "Analysis: Traders ready for wilder swings as rate rises stoke volatility"), Doyle said. Strategists attributed some of the move to poor liquidity ahead of the holidays. “The yen move was overdone. A lot of people had their fingers burned and with thin liquidity in the holiday season, not a lot of people want to get involved right away,” said Marc Chandler, [chief market strategist at Bannockburn Forex in New York](https://www.financedigest.com/former-sec-enforcement-chief-and-deutsche-bank-general-counsel-richard-h-walker-joins-king-spalding-in-new-york.html "Former SEC Enforcement Chief and Deutsche Bank General Counsel Richard H. Walker Joins King & Spalding in New York"). “I think the dollar has topped out. I don’t think we’re going to 150 (yen) anytime soon,” Chandler said. The story of 2022 has been the strength of the dollar, which has surged as the U.S. Federal Reserve [hiked interest rates](https://www.financedigest.com/sp-warns-of-possible-economic-blow-hit-to-japan-inc-from-boj-rate-hike.html "S&P warns of possible economic blow, hit to Japan Inc from BOJ rate hike") at a rapid clip, and as rising geopolitical tensions left investors seeking shelter in less risky currencies. The BOJ, long preoccupied with reviving price [growth to avert a risk](https://www.financedigest.com/wto-sees-subpar-2023-trade-growth-with-multiple-risks.html "WTO sees “subpar” 2023 trade growth with multiple risks") of deflation, has been an outlier among central banks this year. It has kept interest rates negative while other central [banks have hiked hard to tame inflation](https://www.financedigest.com/be-really-really-careful-on-inflation-bank-of-englands-haskel.html "Be ‘really, really careful’ on inflation – Bank of England’s Haskel") and bolster domestic currencies against the U.S. dollar. Sterling slipped against the [dollar and euro on Wednesday as British public borrowing hit](https://www.financedigest.com/european-shares-hit-nine-month-high-dollar-wobbles-after-powell-remarks.html "European shares hit nine month high, dollar wobbles after Powell remarks") a November record, underscoring the challenges for the UK economy. The [British pound](https://www.financedigest.com/shell-to-evaluate-25-billion-pound-british-investments-after-windfall-tax.html "Shell to ‘evaluate’ 25 billion pound British investments after windfall tax") was down 0.8% at $1.2091. The Canadian dollar was little changed on the day at around 1.3595 to the greenback, as [investors remained undecided as to whether the Bank of Canada would tighten further next month](https://www.financedigest.com/6-months-to-go-until-brexit-and-investor-sentiment-remains-bold.html "6 months to go until Brexit and investor sentiment remains bold") following mixed inflation data for November. Meanwhile, [bitcoin was 0.6% lower at $16,791 as cryptocurrencies struggle to recover from the sharp losses](https://www.financedigest.com/dollar-retreats-headed-for-biggest-weekly-loss-since-mid-january-bitcoin-down.html "Dollar retreats, headed for biggest weekly loss since mid-January; bitcoin down") dealt by the high-profile collapse of crypto exchange FTX. [(Reporting by Saqib Iqbal Ahmed; Additional reporting by Harry](https://www.financedigest.com/britains-prince-harry-arrives-at-balmoral-itv-reporter.html "Britain’s Prince Harry arrives at Balmoral – ITV reporter") Robertson in London and Ankur Banerjee in Singapore; Editing by Lincoln Feast, Tomasz Janowski, Kirsten Donovan, Barbara Lewis and Jonathan Oatis) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---