Ministry of Finance(MOF): The Ministry of Finance of Japan is the only department that formulates fiscal and monetary policy in Japan. The Japanese treasury has more influence on the currency than the U.S., British or German treasuries. Japanese finance ministry officials often make remarks about the state of the economy, and these remarks generally have an impact on the yen, such as verbal interventions by finance ministry officials when the yen appreciates or depreciates that are not in line with fundamentals.
Bank of Japan ( BoJ ): The Bank of Japan . In 1998, the Japanese government passed a new law that allows the central bank to set monetary policy independently of the government, while the yen exchange rate remains the responsibility of the Ministry of Finance.
Interest Rates: Interest rates . The overnight rate is the primary short-term interbank rate, determined by the BOJ. The BOJ also uses this rate to express changes in monetary policy and is one of the main factors affecting the yen’s exchange rate .
Japanese Government Bonds (JGBs): Japanese Government Bonds. In order to enhance the liquidity of the monetary system, BOJ buys JGBs with 10-year or 20-year maturity every month. The yield on the 10-year JGB is seen as a benchmark for long-term interest rates. For example, the basis of the 10-year JGB and 10-year US Treasury bills is seen as one of the factors driving the USD/JPY rate. Falling JGB prices (i.e. rising yields) are usually positive for the yen.
Economic and Fiscal Policy Agency: Economic and Fiscal Policy Agency. On January 6, 2001, it officially replaced the original Economic Planning Agency (Economic Planning Agency, EPA). Duties include elaborating economic plans and coordinating economic policies, including employment, international trade and foreign exchange rates .
Ministry of International Trade and Industry (MITI): The Ministry of International Trade and Industry is responsible for guiding the development of Japan’s domestic industries and maintaining the international competitiveness of Japanese companies. But its importance has diminished considerably from the 1980s and early 1990s, when Japan-US trade volumes dominated currency markets.
Economic Data: Economic data. The more important economic data include: GDP , Tankan survey (quarterly business climate status and expectations survey), international trade, unemployment, industrial production and money supply (M2+CDs).
Nikkei-225: Nikkei 255 Index. Japan’s main stock market index. When the exchange rate of Japan is reasonably lowered, the share price of companies aiming to export will increase, and at the same time, the entire Nikkei will also rise. Sometimes, this is not the case, and when the stock market is strong, foreign investors are attracted to invest heavily in Japanese stocks using the yen, and the yen exchange rate can also be pushed up.
Cross Rate Effect: The effect of the cross rate . For example, when EUR/JPY rises, it also causes USD/JPY to rise, probably not due to a rise in the US dollar exchange rate, but due to different economic expectations for Japan and Europe.