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The Bank of Japan (BOJ) is headquartered in the Nihonbashi business district in Tokyo. The BOJ is the Japanese [ | The Bank of Japan (BOJ) is headquartered in the Nihonbashi business district in Tokyo. The BOJ is the Japanese [[Central_banks | central bank]], which is responsible for issuing and handling currency and treasury securities, implementing monetary policy, maintaining the stability of the Japanese financial system, and providing settling and clearing services. | ||
In this Wiki we will look at the BOJ structure, BOJ jawboning, their mandate and more. | In this Wiki we will look at the BOJ structure, BOJ jawboning, their mandate and more. | ||
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They typically meet once per month. However, they have been known to meet twice per month on occasion if they feel there is enough concern about what is happening within the Japanese economy. | They typically meet once per month. However, they have been known to meet twice per month on occasion if they feel there is enough concern about what is happening within the Japanese economy. | ||
Because Japan is very dependent on exports the BOJ has an even more active interest than the ECB does in preventing its country from having an excessively strong [[currency]]. The BOJ has been known to come into the markets and artificially weaken its own [[currency]] by selling Yen against [ | Because Japan is very dependent on exports the BOJ has an even more active interest than the ECB does in preventing its country from having an excessively strong [[currency]]. The BOJ has been known to come into the markets and artificially weaken its own [[currency]] by selling Yen against [[US_dollar | U.S. Dollars]] and Euros. | ||
=='''BOJ Jawboning'''== | =='''BOJ Jawboning'''== | ||
The BOJ has been known to be a particularly vocal [ | The BOJ has been known to be a particularly vocal [[Central_banks | central bank]] when it feels concerned about excess [[currency]] [[Sentiment_Analysis#Volatility | volatility]] and strength. It's very common to hear the members [[jawbone]] the Yen [[currency]] saying that the [[Price_Action_Analysis | price]] is too high and if it doesn’t come down they will step in and take some action to prevent any further strengthening. | ||
Sometimes the market will trade in line with this language and sometimes it won't. The way we can figure out how the market will trade jawboning from the BOJ is by knowing how much credibility the BOJ has with the market at that time. If they have not followed through on the last few threats then the market will probably not trade in line with the language. But if they have followed through on recent threats then you can bet that the market will listen and act very carefully. Sometimes traders just have to do what they are told! | Sometimes the market will trade in line with this language and sometimes it won't. The way we can figure out how the market will trade jawboning from the BOJ is by knowing how much credibility the BOJ has with the market at that time. If they have not followed through on the last few threats then the market will probably not trade in line with the language. But if they have followed through on recent threats then you can bet that the market will listen and act very carefully. Sometimes traders just have to do what they are told! | ||
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=='''BOJ Mandate'''== | =='''BOJ Mandate'''== | ||
Its mandate is to maintain [ | Its mandate is to maintain [[Price_Action_Analysis | price]] stability and ensure the stability of the financial system. This means that [[Fundamental_Analysis#Inflation_and_Deflation | inflation]] is the bank's top focus. At the time of this writing, Japan has had near 0% [[Fundamental_Analysis#Inflation_and_Deflation | inflation]] for more than 2 decades so [[Fundamental_Analysis#Inflation_and_Deflation | inflation]] is almost always the most important thing to the BOJ. | ||
[https://www.boj.or.jp/en/ www.boj.or.jp/en] | [https://www.boj.or.jp/en/ www.boj.or.jp/en] | ||
Revision as of 00:37, 3 May 2023
The Bank of Japan (BOJ) is headquartered in the Nihonbashi business district in Tokyo. The BOJ is the Japanese central bank, which is responsible for issuing and handling currency and treasury securities, implementing monetary policy, maintaining the stability of the Japanese financial system, and providing settling and clearing services.
In this Wiki we will look at the BOJ structure, BOJ jawboning, their mandate and more.
Japan – The Bank of Japan (BOJ)
BOJ Structure
The structure of the BOJ consists of a Monetary Policy Committee which is made up of the BOJ governor, 2 deputy governors, and 6 other members that are hand-picked by the governors.
They typically meet once per month. However, they have been known to meet twice per month on occasion if they feel there is enough concern about what is happening within the Japanese economy.
Because Japan is very dependent on exports the BOJ has an even more active interest than the ECB does in preventing its country from having an excessively strong currency. The BOJ has been known to come into the markets and artificially weaken its own currency by selling Yen against U.S. Dollars and Euros.
BOJ Jawboning
The BOJ has been known to be a particularly vocal central bank when it feels concerned about excess currency volatility and strength. It's very common to hear the members jawbone the Yen currency saying that the price is too high and if it doesn’t come down they will step in and take some action to prevent any further strengthening.
Sometimes the market will trade in line with this language and sometimes it won't. The way we can figure out how the market will trade jawboning from the BOJ is by knowing how much credibility the BOJ has with the market at that time. If they have not followed through on the last few threats then the market will probably not trade in line with the language. But if they have followed through on recent threats then you can bet that the market will listen and act very carefully. Sometimes traders just have to do what they are told!
BOJ Mandate
Its mandate is to maintain price stability and ensure the stability of the financial system. This means that inflation is the bank's top focus. At the time of this writing, Japan has had near 0% inflation for more than 2 decades so inflation is almost always the most important thing to the BOJ.