In general terms, two tail risks could strengthen the case for a significant strengthening of the Japanese Yen (JPY) in the near termaccording to economists at Standard Chartered.
If the Bank of Japan maintains its monetary policy in March, the Dollar could register an immediate rebound against the Yen
First of all, there is still a non-negligible risk of a hard landing in emerging markets, which could revive demand for safe-haven assets such as the Yen.
In second place, The BoJ could surprise with a more aggressive tightening than markets anticipate. It must be taken into account that the BoJ can modify multiple parameters, from the reference rate, the three-tier system of interest rates and yield curve control (YCC). Bloomberg has also reported that the Bank of Japan could end the YCC and specify the size of bond purchases in advance, perhaps to avoid a sharp rise in long-term yields.
On the contrary, if the BoJ maintains its March monetary policy, the Dollar could register an immediate rebound against the Yen and cut their losses, depending on the central bank's messages and guidance for the April monetary policy meeting.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
