Nikkei falls and yen surges as Japan holds interest rates
The Bank of Japan has decided against any extra monetary easing following a share fall and a surge on the yen. Despite coming under pressure to take further action, the Bank has decided to keep interest rates as is and not take them further into negative territory. For years now Japan has been trying to boost its economy after a period of deflation.
In January the Bank of Japan introduced negative rates, but these failed to provide much of a boost for the economy. Negative rated entail commercial banks being charged if they deposit money with the central bank. The Nikkei 225 finished 3.6% lower at 16,666.05.
Prime Minister Shinzo Abe has introduced three policies, often called “Abenomics,” to try to get Japan’s economy back on track. Inflation still has not reached its 2% target.
These decisions come as the Chinese yen currency soars, which will further affect Japan’s crucial exports sector. The yen has now risen 2% against the dollar, with one dollar worth 109.33 yen.