Yen drops as BoJ slashes rates below zero

Currency weakens after Bank of Japan announces intensified battle against ‘deflationary mind-set'; the yen will continue to lose ground to the US dollar, analysts say

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Surprise hand: the 5–4 decision marks a new chapter in the BoJ's efforts to reverse persistent deflation

The yen fell from 118.5 to 121.5 against the US dollar today (January 29), after the Bank of Japan (BoJ) cut interest rates below zero in a surprise move that further expands its monetary stimulus programme.

The drop, which analysts failed to predict, reversed the gains prompted by safe-haven inflows at the start of this year.

"I expect we will be seeing USD/JPY edge up towards 1.22, 1.23 next week," said Gerrard Katz, chief FX strategist for Asia at Scotiabank in Hong Kong, who described today

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