Bank of Japan Maintains Ultra-Low Rates

The Bank of Japan is maintaining its -0.1% interest rate target, while European central banks and the U.S. Federal Reserve are raising interest rates. Growing monetary policy divergence between Japan and the rest of the world has pushed the yen to 24-year lows.—cnbc.com

Answer the following questions to check your understanding of the story.

With the Japanese yen at a 24-year low, what can we say about the U.S. dollar?

The U.S. dollar is ______________.

a) at a 24-year high against all other currencies

b) depreciating against the yen

c) at a 24-year low against the yen

d) at a 24-year high against the yen

How does the change in the Japanese interest rate differential influence the demand for Japanese yen and the supply of Japanese yen?

The demand for Japanese yen ______________, and the supply of Japanese yen ______________.

a) increases; increases

b) decreases; decreases

c) increases; decreases

d) decreases; increases

Bank of Japan Maintains Ultra-Low Rates

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