After the historic decision of pushing the much talked about interest rates from negative territory to positive arena, the Bank of Japan, Japan's central bank recently decided to retain its interest rates.
The decision to retain the interest rates although brought about some volatility to the Yen, the Japanese currency, the markets ended the day optimistically in green.
Nikkei Gains Nearly 1 per cent
One US Dollar was worth 155.26 Yen on 24 April, after the meeting, scenes changed, as the value of the currency plummeted. By 27 April, one US Dollar was worth 158.10 Yen. Nevertheless, two of the major indices ended the last day's trade of 26 April in green. Here, the benchmark index of Nikkei ended the day on 37,934.76 points, gaining 0.81 per cent. Meanwhile, another important index, TOPIX, ended the day on 2,686.48, gaining 0.86 per cent.
After 25 April's all-important meeting, the Japanese central bank's basic discount rate currently stands at 0.30 per cent. Here the basic discount rate for context, is equivalent to the repo rate in India and the interest rate in the US. This, as, the basic discount rate is the rate at which the rate at which financial entities can borrow money from the Bank of Japan.
Plans to Reduce Bond Purchases
In addition, at this crucial meeting the bank said it will ruminate over strategies to reduce its bond purchases, including reviewing the monthly purchase range of 5-7 trillion yen that it had previously set.
According to reports, the current rate is lower than its long-term average of 4.68 per cent. Meanwhile, Asia's second largest economy's short-term rate target is set at 0–0.1 per cent.
These market number although not drastic or dramatic, is largely in sync with the movements observed last time around, when interest rate were pushed out of the negative territory after 17 long years. The markets that started the day in green, made fruitful gains later on in the weeks, that followed.
