Yen climbs to seven-week high after crucial decision by Japanese government

Yen rose in European trade against a basket of major rivals, resuming gains against dollar after a hiatus yesterday, almost hitting seven-week highs once again after the Japanese Government's decision to utilise some of the money in the 2022 budget to underpin the currency.

Bank of Japan Haruhiko Juroda said recently that achieving the central bank's 2% target will require some more time. 

USD/JPY fell 0.8% to 130.50, with a session-high at 131.58, after closing down 0.6% yesterday, the first loss in four days on profit-taking off seven-week highs at 129.64. 

Yen also declined amid slowing demand on safe havens as concerns about the global banking sector subside. 

Budget of 2023

The Japanese government agreed to use some of the money in the 2023 budget to combat inflation in the new financial year. 

Such a move would put pressure on the Bank of England to move away from current negative rates policies sooner rather than later. 

Kuroda

However, BoJ Governor Haruhiko Kuroda said it's still too early to talk about exiting the current ultra easy policies, with inflation still below targets. 

It's worth mentioning that Kuroda is set to retire soon on April 8, succeeded by Kazuo Ueda who got Parliamentary approval already to head the Bank of Japan.