An announcement was made by the Bank of Japan (BoJ) to modify its so-called Yield Curve Control framework, which then makes havoc in the currency markets. The Bank of Japan then produces growing data and now tops 50% of the market.

New data shows that the Bank of Japan has held the share of Japanese Government bonds and has grown to where it now tops 50% on a market value basis. Instead of saying that, the Bank of Japan has increased bond purchases to 9 trillion from 7.3 trillion per month.

The Japanese Yen strengthened against the Dollar, and an announcement made by the Bank of Japan to modify its so-called Yield Curve Control framework came at one of the most significant. The Bank of Japan then conducted an unscheduled bond-buying operation.

Bond buying operations, as a surge in global yields, pose a threat to Japan. The move came after the central bank and widened its yield curve. Meanwhile, the spread to Japan makes Thursday's trading show that the Dollar touches a one-week high versus Yen.

John Vail of Nikko Asset Management Says The Japanese Yen Could Strengthen in 2023

Citing many problems regarding the development of the Yen against the US dollar, one economist said: "And we ended up expecting that the yen is going to be quite a bit stronger in 2023, even up to 122 versus the US Dollar by the end of the year,"

"And so we expect the stock market to go up, not a great deal in year terms, but in terms of the US Dollar, we expect it to be the best performing market in 2023. Our view on other markets is also quite good," continued the strategic expert from Nikko Asset Management.

"We think that the US is going to go up. The US will go up, which is more moderate but still substantial, while Europe should also do quite well. That is a bullish call,"

"But regional banks here have always been candidates for M&A, and some of that has been happening, and certainly, the prospects look good in a rising interest rate environment for the financial sector in general. And regional banks certainly would be an area of interest,"

"I disagree with him on the larger banks; they are just so inexpensive in Japan, and the dividend yields are so high in its very low PE ratio. Single digit and you know 35 dividend yield, but I'm not sure of today, but they are just so undervalued and a lot of their investment,"

In the end, this economist said that bond investing is mainly done by borrowing US Dollars and buying fixed-income securities with that. So there is less foreign exchange risk than he said that economic growth in Japan would emerge.

In Thursday trading, the Dollar Touches One-Week High vs the Yen

Before the end of 2023, the Dollar is experiencing a significant economic slowdown. And the movement against the Yen in the USD/JPY market on Thursday was boosted by a jump in treasury yields and investors' expectations

It is for a rebound in Chinese growth as Covid-19 curbs loosen. The Dollar, until this Thursday, the Dollar rallied by as much as 0.67 per cent against the Yen to 134.40 in Asian trading.

The Bank of Japan sent the pair spiralling lower with an unexpected loosening of the 10-year Japanese government bond yield policy band, despite the unwinding stimulus.

Fed officials managed to make the Yen even more difficult until the end of this year. But before that, the Yen mentioned economists that the Japanese Yen could increase. In 2023, John Vail believes that the Japanese Yen will be more dominant than the US Dollar.