The Bank of Japan’s rate hike to its highest level since 2008 strengthens the JPY, pressuring the AUD/JPY cross in Asian trade.
The Australian Dollar weakens against the Japanese Yen, with the AUD/JPY pair slipping to around 113.20 in Asian trading on Tuesday. The move follows the Bank of Japan’s decision to raise interest rates to their highest level since 1995, bolstering the JPY’s appeal.
Prior to the hike, the AUD/JPY cross had traded near 114.00, reflecting expectations of a shift in BoJ policy. The last time the BoJ raised rates to this level was during Japan’s late-1990s tightening cycle, a period marked by deflationary pressures.
Markets are assessing the impact of the BoJ’s move on carry trades and broader FX flows, with the JPY gaining ground against risk-sensitive currencies like the AUD.