The Japanese yen against the US dollar started falling again. The current quote is 133.98.
At a meeting on Friday, the Bank of Japan left the interest rate negative at -0.10% y/y. In theory, this decision had been expected: the regulator never announced any major actions and demonstrated no signs of readiness to revise the basics of its monetary policy.
However after the spread between the rates of the BoJ and the Federal Reserve system grew, market reactions were emotional. This week the Fed has lifted the rate by 75 base points at once to 1.50-1.75% y/y and plans to go on toughening monetary conditions.
The devaluation of the yen solves certain issues of export companies, augmenting their profits. Simultaneously, the BoJ can focus on the development of financial markets and control over prices in the country. Inflation seems like a crucial issue for the Bank of Japan: they still cannot stabilise the CPI. Meanwhile, target inflation remains 2.0%.
We can imagine that for the BoJ, the advantages of the weak yen seem more important than the drawbacks. From this viewpoint, its inaction becomes understandable.