The Bank of Japan has effectively removed its yield cap in response to an unexpected surge in U.S. Treasury yields and entrenched cost-push inflation, sending its strongest signal yet that it is preparing to unwind monetary stimulus to come more into line with its global peers.
The U.S. dollar temporarily rises to the lower 150 yen range from the mid-149 level in Tokyo after the Bank of Japan made another tweak to its yield cap program at its policy-setting meeting.
The Bank of Japan faces a difficult monetary policy decision at its two-day meeting beginning Monday, as the yen could further weaken if a policy tweak is not delivered as is expected by some in the financial markets.