The Bank of Japan (BoJ) left its ultra-expansionary monetary policy unchanged. As a result, the yen depreciated. Economists at Commerzbank believe that a weaker yen is justified.

The JPY flinches, the BoJ does not

“Clearly, some on the FX market had expected that in view of the rampant yen-weakness the BoJ would at least send out cautious signals of monetary tightening. They were disappointed.”

“As long as the monetary policy divide between Japan and the rest of the world remains in place a weaker yen remains fundamentally justified, and the motivation for other central banks to make concerted interventions is likely to remain low.”