KUALA LUMPUR, May 21 (Bernama) -- Bursa Malaysia ended at its intraday low on Thursday as investor sentiment remained cautious amid ongoing foreign outflows, although the recent weakness may present bargain-hunting opportunities in fundamentally sound blue-chip counters. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) eased 9.33 points, or 0.54 per cent, to 1,708.36, from yesterday’s close of 1,717.69. The benchmark index, which opened 3.74 points higher at 1,721.43, hit an intraday high of 1,722.50 in early trade before losing momentum for the rest of the day. Market breadth was negative, with losers outpacing gainers 656 to 508, while 565 counters were unchanged, 989 untraded and 32 suspended. Turnover fell to 3.49 billion units worth RM3.70 billion compared with 4.15 billion units worth RM4.29 billion on Wednesday.
Quick Summary
Bank of Japan may raise rates as early as March if the yen weakens further
Weak currency has become a political headache due to rising import costs
Markets already price a ~70% chance of a hike by April
Policy rate could rise to 1.75% by 2027, according to former board member
What’s Happening
The Bank of Japan could move sooner than expected on interest rates if the yen resumes its slide, according to former board member Makoto Sakurai.
Japan’s next policy meeting is scheduled for March 18–19, around the same time Prime Minister Sanae Takaichi is expected to meet US President Donald Trump in Washington.
Why the Yen Matters
The yen has fallen about 8% since Takaichi took office in October
It hit an 18-month low of 159.45 per dollar in January
Currently trading around 155 per dollar, still significantly weaker than last year
A weak yen:
Pushes up imported fuel and food costs
Adds to household inflation pressures
Creates political strain ahead of US-Japan talks
Sakurai noted that currency intervention offers only temporary relief, and that a rate hike would be a more effective tool to stabilise the yen.
Policy Outlook
Current policy rate: 0.75% (30-year high after hikes in 2024)
Inflation has remained above the 2% target for nearly four years
Majority of economists expect rates to reach 1% by end-June
Sakurai suggested:
The BOJ could hike twice in 2026 and twice in 2027
Policy rate may eventually rise to 1.75%, considered a neutral level
However, faster hikes risk stressing regional banks and small businesses, potentially triggering bankruptcies.
Market Implications
Markets see roughly a 70% probability of a hike by April
A March move would signal greater urgency tied to currency weakness
Higher Japanese rates could:
Support the yen
Lift JGB yields
Pressure global carry trades
Bottom Line
The yen is now driving BOJ timing more than inflation alone.
If currency weakness intensifies ahead of the US-Japan summit, the BOJ may choose to act early — even if April would normally make more policy sense.
For markets, that means FX volatility could dictate monetary policy speed, not just domestic economic data.
Key Takeaways
Yen weakness raises odds of a March rate hike
BOJ may gradually lift rates toward 1.75% neutral level
Faster tightening carries financial stability risks
Currency moves are now central to Japan’s policy decisions
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