Can Bitcoin reach new highs against the Japanese yen as the Bank of Japan officially ends negative interest rates?
The Bank of Japan (BOJ) has officially announced the end of its negative interest rate policy, marking the first interest rate hike in 17 years. The benchmark interest rate has been raised from -0.1% to a range of 0% to 0.1%. The central bank has also canceled the yield curve control policy. Following the policy announcement, Japanese stocks have risen, while the Japanese yen continues to depreciate. Can Bitcoin against the yen reach new highs?
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Japanese stocks rise, yen continues to depreciate
Can Bitcoin against the yen reach new highs?
The Nikkei 225 index is currently quoted at 39,900, up 0.4%. After decades of stagnation, the Japanese stock market finally broke through its high point in 1989 in February and reached a high of 40,472 on 3/6.
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However, although Japan has ended its negative interest rate policy implemented since February 2016, there is still a difference of more than 5% in interest rates compared to the US dollar. The US dollar against the yen (USDJPY) briefly fell after the announcement but then continued to rise, reaching 150.36 at the time of writing. The yen’s trend remains weak.
As the yen has been in a long-term negative interest rate environment, it has been used by investors as a tool for carry trade, and Bitcoin against the yen reached a historical high back in February (when Bitcoin against the US dollar was still at 52K). Now that Japan has finally ended the era of negative interest rates, with the continuous rise of the Japanese stock market and the simultaneous increase in Japanese corporate wages and domestic prices, will the yen be able to break free from its depreciation trend and gradually return to a normal track?
Note: Carry trade refers to borrowing money in a low-interest-rate country (such as Japan) and exchanging it for the currency of a higher-interest-rate country (such as the US) to earn interest differentials.
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BOJ
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Carry trade
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