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Bank of Japan policy is key to slowing yen’s slide

Reported · Written up by our desk · Central Banks

Higher interest rates are being framed as necessary for Japan to address a widening yield gap versus the United States, a condition that can weigh on the yen, according to WSJ Markets.

The piece argues that, given the magnitude of the gap, only the Bank of Japan has the policy leverage to help arrest the yen’s decline.

It highlights the link between relative rates and currency moves, noting that a shift in Japanese policy would be needed to narrow the spread with U.S. yields.

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