In a meeting held on April 28, instead of adopting easing monetary policy, Bank of Japan has decided to wait-and-see the impacts of the current negative rates on the economy.

As a result of this decision, the yen surged to record high on that day – about 3% rise against both dollar and euro while the 225-issue Nikkei Stock Average tumbled 3.61%.

ANBOUND's research team is of the view that the inaction of Bank of Japan has prompted the yen to rise further, bringing substantial negative impacts to the Japanese corporations and households.

However, due to the pressure from the United States and other various factors, it is highly unlikely for Japan to intervene the currency market; the possibility of continued rise of yen is larger.

This helps to maintain a weaker dollar as well as maintaining a relatively stable RMB exchange rate.