Essential

Bank of Japan (BOJ)

Japan's central bank, responsible for monetary policy, interest rate decisions, and maintaining financial system stability.

Definition

The Bank of Japan is Japan's central bank and one of the most influential institutions in global forex markets. It sets the country's monetary policy, including interest rates and asset purchase programmes. The BOJ is known for maintaining ultra-loose monetary policy for decades, including negative interest rates and yield curve control, which has made the yen a popular funding currency for carry trades.

How It Works

Sets the overnight call rate (Japan's benchmark interest rate)
Conducts yield curve control to cap long-term government bond yields
Intervenes in forex markets to manage extreme yen moves
Publishes Tankan business surveys used as leading economic indicators

Trading Tips

BOJ meetings can trigger sharp moves in JPY pairs, especially USD/JPY

Watch for intervention warnings when USD/JPY moves too fast in either direction

The BOJ's ultra-loose stance has made JPY a popular carry trade funding currency

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