Speculations Bank of Japan displayed on yen and Nikkei index
2023.02.13 04:04
Speculations Bank of Japan displayed on yen and Nikkei index
By Kristina Sobol
Budrigannews.com – On Monday, markets speculated about the next Governor of the Bank of Japan and whether or not the bank would extend its ultra-loose monetary policy. As a result, the Japanese yen lost value against the US dollar and local stocks also fell.
The stock index fell nearly 1% for the day, while the sank 0.6% against the dollar and was close to one-month lows.
According to reports in the media, the Japanese government might name a successor to the BOJ governor who is currently in office, Haruhiko Kuroda, as soon as this week. However, the primary concern was whether the ultra-loose monetary policy of the central bank would be maintained under the new leadership.
Friday’s news suggested that a person who is seen as an outsider in Japan’s political establishment will be chosen to be governor. However, Ueda recently stated that the BOJ’s ultra-accommodative policy did not require modification and expressed his support for it.
Even though the nation is dealing with high inflation and a weakening currency, this dampened expectations of an imminent shift in the BOJ’s ultra-dovish policy.
On Monday, it was reported that Ueda would probably leave the BOJ’s ultra-dovish policy.
“Even if we place (Ueda) on a spectrum of dove-hawk, he will probably still lean toward dovishness. As a result, “the BoJ’s data dependency – inflation and wage growth – will become more important,” according to analysts at ING in a note. “He is likely to shift monetary policy gradually.”
Through 2022, the yen was heavily influenced by a widening gap between interest rates. Inflation reached 40-year highs during the year as a result of this and rising costs of raw materials.
There is a lot of talk about when the BOJ might start tightening policy because it is currently trending at twice the annual target of 2%. In December, the central bank unanticipatedly expanded the range within which it allows yields on benchmark government bonds to trade, raising expectations of further tightening.
However, it defied expectations for additional measures in January, resulting in increased market volatility.
Fears of a possible end to the BOJ’s accommodative stance, which had allowed local stocks to enjoy a high-liquidity environment for nearly a decade, also contributed to the recent decline in Japanese stocks.
