Bank of Japan will be vigilant for sharp movements in the yen and continue maintaining an easy money policy

Board members of the Bank of Japan (BOJ) agreed that the inflationary impact of recent sharp moves of the yen should be scrutinized and reaffirmed their determination to keep soft money policy, despite the fact that the currency's instability alarmed financial markets. If the yen were a weaker currency, its fall could mean less for financial markets. However, the yen plays a key role in global finance, ranking third in terms of trading volume in the world. The rapid collapse of the yen could not only affect Japan, but also other markets.

On Wednesday, the minutes of the Bank of Japan's July policy meeting were released. In the minutes, one of the members said that downward pressure on the yen could ease as the slowdown in global economic growth begins to weigh on inflation and long-term interest rates worldwide.

Another board member added that there is a possibility that the current trend of a weak yen could change into a trend of a strong yen, if the global economy experiences a shock.