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The Bank of Japan may be growing concerned over the future strength of the Japanese yen, according to analysts at MUFG Bank. They point out the risk of a break under 100 in USD/JPY is increasing. 

Key Quotes:

“We suspect JPY direction may soon start to get more attention. However, we are not yet at an alarming stage. The 100-level is always crucial and could spark volatility and a lurch stronger that could be counter-productive from an inflation-targeting perspective. But as Kuroda stated today, the yen is weakening with the US dollar, but just by less.”

“The BoJ will also need to accept the inevitable. We have stated all through this year that the yen would trend stronger given the collapse in global yields due to COVID. Whatever the BoJ can concoct it will not change that basic fact. The BoJ can play a role in slowing the trend of JPY appreciation but we do not see the policy review outcome in March as fundamentally changing the direction.”