Japanese Yen Plummets to 17-Month Low as BOJ Maintains Cautious Stance

Currency Depreciation Accelerates Following BOJ Decision

The Japanese yen continued its decline, reaching its lowest level in 17 months against the Australian dollar and 11 months against the US dollar during Monday's (22/12/2025) trading session ²

. This movement followed the Bank of Japan's decision to maintain a cautious policy tone despite implementing a rate hike in the previous week.

Market Reaction to BOJ's Dovish Comments

Analysts attribute the yen's depreciation to BOJ Governor Kazuo Ueda's dovish remarks, which emphasized a cautious approach going forward ¹

. The comments effectively counteracted the potential positive impact of the rate hike on the yen. Currency traders observed significant losses with the yen weakening 1.3% against the euro, 1.4% against the USD, and 1.5% against the AUD.

Government Warning Fails to Stem Losses

The Japanese government's warning about potential currency intervention failed to provide substantial support to the yen ²

. Market participants appeared unconvinced about the government's ability to reverse the currency's downward trend through intervention alone.

Market Implications and Future Outlook

The yen's continued weakness reflects broader market sentiment regarding Japan's monetary policy direction. As the currency remains under pressure, market participants will be closely monitoring future BOJ announcements and government interventions. The current situation highlights the complex interplay between monetary policy decisions and currency market dynamics.