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USD/JPY still edging higher but which Central Bank has had the best of 2023?

As the markets try to digest the future outlook for monetary policy from the likes of the ECB, Fed, BOE and BOJ, there has been one of those that has enjoyed truly rare success in terms of its performance over the year so far and that has implications for its economy as a whole. The Bank of Japan is that one in question. The BOJ owns a truck load of the Nikkei 225 via ETFs and the index is up over 28% year to date, far outstripping any gains in the G8, except those seen in the Nasdaq composite (+33%).  The BOJ is the top holder of stocks in more than 55% of Nikkei 225 companies. Add that to the gains they have made via their holding of US treasury bonds and still ultra-low funding costs via JGB issuance (albeit above 0.70% now) and you have a double whammy that has seen them make serious cash on both fronts. Even the weaker Yen and rising oil price has still only delivered a Japanese inflation rate not that much above 3%. Of course were it not for all these factors the economy would still be in deflation. As much as the BOJ and the MOF would issue rhetoric to stop the Yen from weakening, its weakness central to making them the most profitable central bank this year, and by a considerable margin. The USD/JPY is just now trading at 147.75
 

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