Global Currency Market Shifts as Fed and BOJ Rate Decisions Emerge

The dollar surged to a two-year peak as the Federal Reserve indicated a slower pace of rate cuts. Meanwhile, the yen dipped after the Bank of Japan maintained steady rates. Global currencies reacted, with many hitting milestone lows, and market expectations adjusted to new economic realities.

The global currency market experienced significant shifts Thursday as the Federal Reserve and the Bank of Japan (BOJ) announced crucial rate decisions. The Fed signaled a deceleration in rate cuts in 2025, propelling the dollar to reach a two-year high. Conversely, the yen dropped after the BOJ opted to keep rates unchanged.

The yen's fall, followed closely by other currencies like the Swiss franc, Canadian dollar, and South Korean won, marked a turbulent day in Asian markets. Traders adjusted their expectations, navigating the pronounced changes as rate differentials between the U.S. and Japan seem poised to persist.

Fed Chair Jerome Powell emphasized the cautious approach needed to tackle persistent inflation, affecting global stock markets and bond yields. As central banks weigh their next moves, the dollar maintains its upward momentum amid uncertainty in currency markets.

(With inputs from agencies.)