The Impact of the Bank of Japan’s News Announcements on the Japanese Yen,U.S. Dollar, and the Euro

This article examines the impact of news about the Bank of Japan monetary policy announcements regarding the Japanese yen, U.S. dollar, and the Euro interest rates. Whether or not the announcements from the monetary authorities impact the domestic markets is related to the success of their policies. In Japan, a zero or low interest rate policy has been in effect under severe economic conditions for almost ten years, so there is some possibility that evident changes in interest rates do not occur, contrary to the usual cases. Moreover, an ongoing strange phenomenon is that Japanese yen appreciates greatly in spite of the recession and huge amount of accumulated debt. It should have been quite difficult to establish monetary policies and obtain good performance. However, the empirical results that employ the theory of market efficiency hypothesis show the recent existence of significant impacts of the Bank of Japan announcements on not only domestic interest rates but also on those of foreign countries. These results have contributed to the recent success of monetary policy in Japan.