Bank of Japan Accounts (March 31)
The desk interprets the recent Bank of Japan (BoJ) accounts as indicative of a significant contraction in monetary policy support, which could lead to a stronger yen in the medium term. Per the full note source, total assets at the BoJ decreased by approximately 67.6 trillion yen year-on-year, reflecting a reduction in Japanese government securities and loans, primarily due to a tapering of the Loan Support Program. This contraction suggests the BoJ is pivoting away from its aggressive easing stance, which could influence yen strength against major currencies. The upcoming GDP growth rate release on May 19 will be critical in assessing the economic backdrop against this tightening narrative.
What the desk is arguing
The desk frames the BoJ's recent asset reduction as a pivotal shift in its monetary policy approach, signaling potential yen appreciation. The total assets of the BoJ fell to 662.1 trillion yen, a 9.3% decrease from the previous year, primarily due to a 45.1 trillion yen reduction in Japanese government securities, which indicates a deliberate scaling back of asset purchases.
Additionally, loans provided through the Loan Support Program decreased by 19.7%, further underscoring the BoJ's move towards normalization. This trend may lead to tighter liquidity conditions, which historically support a stronger yen.
Where it sits in our coverage
Our consensus target for USD/JPY is 1.075, with a range from 1.04 to 1.12. Notable firm targets include: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26) - citi: 1.12 (Mar26)
The desk's view aligns closely with jpmorgan, which anticipates a moderate appreciation of the yen, while diverging from bofa, which remains bearish on the yen's prospects.
How other firms see it
Firms aligned with the desk's perspective, such as jpmorgan and citi, expect the yen to strengthen as the BoJ shifts its policy stance. Conversely, bofa holds a contrary view, predicting continued weakness in the yen amid global economic uncertainties.
Watch USD/JPY closely as it reacts to the BoJ's policy changes and upcoming economic data releases, particularly the GDP growth figures that could further influence market sentiment.
What the calendar says
With the GDP growth rate release on May 19, traders should prepare for potential volatility in the yen. This data point will provide insights into the effectiveness of the BoJ's current policy stance and its implications for future monetary policy adjustments.
USD/JPY — All Desk Targets
| Firm | Stance | YE 2027 |
|---|---|---|
Goldman Sachs | Bearish | 165.00 |
UOB | Bearish | 163.00 |
Citi | Bearish | 163.00 |
Bank of Japan Accounts (March 31, 2026) April 7, 2026 Bank of Japan Assets (thousand yen) Gold 441,253,409 Cash 3 428,936,147 Japanese government securities 530,869,568,347 Corporate bonds 4 2,193,212,925 Pecuniary trusts (index-linked exchange-traded funds held as trust property) 5 37,121,457,665 Pecuniary trusts (Japan real estate investment trusts held as trust property) 6 653,782,273 Loans (excluding those to the Deposit Insurance Corporation) 77,720,900,000 Foreign currency assets 7 11,666,306,244 Deposits with agents 8 7,399,685 Others 1,029,055,610 Total 662,131,872,307 Liabilities and Net Assets (thousand yen) Banknotes 116,315,603,173 Current deposits 459,743,282,930 Other deposits 9 49,710,846,851 Deposits of the government 2,154,858,276 Payables under repurchase agreements 17,987,122,151 Others 10 1,857,692,082 Provisions 10,586,442,843 Capital 100,000 Legal and special reserves 3,775,923,999 Total 662,131,872,307 The Bank's total assets outstanding at the end of March 2026 is 662.1 trillion yen, with an approximate decrease of 67.6 trillion yen from the corresponding balance of 729.8 trillion yen at the end of March 2025 (the rate of decrease is 9.3%). Main reasons for year-on-year changes in major items: Table: Main reasons for year-on-year changes in major items Assets Year-on-Year Differences (Rate of Changes) Japanese government securities -45.1 trillion yen (-7.8%) Reflecting the reduction of the purchase amount of JGBs. Loans (excluding those to the Deposit Insurance Corporation) -19.1 trillion yen (-19.7%) Reflecting the decrease in the loans provided mainly through the Loan Support Program.
Table: Main reasons for year-on-year changes in major items Liabilities Year-on-Year Differences (Rate of Changes) Current deposits -70.7 trillion yen (-13.3%) Reflecting the reduction of the purchase amount of JGBs and the decrease in the loans provided mainly through the Loan Support Program. 3 Coins reserved for circulation. 4 Includes bonds issued by real estate investment corporations. 5 Beneficiary interests in index-linked exchange-traded funds purchased through a trust bank. 6 Investment equity issued by real estate investment corporations purchased through a trust bank. 7 Foreign currency deposits held at foreign central banks and the Bank for International Settlements, securities issued by foreign governments, foreign currency mutual funds, and foreign currency loans, such as (1) loans by U.S. dollar funds-supplying operations against pooled collateral and (2) loans pursuant to the special rules for the U.S. dollar lending arrangement to enhance the fund-provisioning measure to support strengthening the foundations for economic growth conducted through the loan support program. 8 Deposits held at agents that conduct operations relating to treasury funds and Japanese government securities on behalf of the Bank of Japan. These deposits are reserved for such operations. 9 Deposits held by foreign central banks and others. 10 Includes miscellaneous liabilities and current income (net accumulated profits). For reports at the beginning of the fiscal year, net income for the previous fiscal year is also included prior to its appropriation. 11 End-of-term figures as of March 31 and September 30 are preliminary, and the final figures are released in May and November in the Bank's financial statements. (Annex Table 1) Breakdown of Japanese government securities (thousand yen) Japanese government bonds 530,869,568,347 Treasury discount bills 0 (Annex Table 2) Loan Support Program The table below represents the loan amounts outstanding under the Bank's Loan Support Program. (thousand yen) Fund-Provisioning Measure to Support Strengthening the Foundations for Economic Growth * 598,586,080 Fund-Provisioning Measure to Stimulate Bank Lending 48,533,100,000 Total 49,131,686,080 The figure for the loans other than those pursuant to the special rules for the U.S. dollar lending arrangement is included in "Loans" as Assets, and that for the loans pursuant to the special rules for the U.S. dollar lending arrangement is included in "Foreign currency assets" as Assets. (Annex Table 3) Annex Table 3 (thousand yen) Loans by Funds-Supplying Operations against Pooled Collateral (including funds provided under the fixed-rate method), Funds-Supplying Operation to Support Financial Institutions in Disaster Areas and Funds-Supplying Operations to Support Financing for Climate Change Responses 28,932,200,000
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Cross-firm research
USD/JPY Consensus Check: Spot at 161.71, Median Target 149 — Week of July 11, 2026
USD/JPY trades at 161.71, some 8.53% above the 23-firm median Dec-26 target of 149.0, with a 25-point dispersion signalling deep disagreement on the BoJ path.
USD/JPY at 161.71: Consensus Targets 149.0 With a 25-Point Spread
USD/JPY trades 8.53% above the 23-firm Dec-2026 consensus of 149.0, with a 25-point dispersion that reflects sharply divergent BoJ and US rates assumptions.
USD/JPY Consensus Check: Spot at 161.71, Median Target 149.0 — Week of July 10, 2026
USD/JPY trades at 161.71, 8.53% above the 23-firm median Dec-26 target of 149.0, with a 25-point dispersion that reflects deep disagreement on the BoJ-Fed rate-spread path.