The Yen modestly strengthened this morning as the Japanese central bank voted against beginning open-ended asset purchases.
The Japanese Yen exchange rate was in the region of 94.1800 Yen to one US Dollar as of 10:20 pm
After an eight-to-one vote against board member Sayuri Shirai’s proposal to begin open-ended asset purchases immediately, the Yen climbed against the US Dollar to trade in the region of 94 Yen per Dollar.
During the Bank of Japan’s highly anticipated two-day policy meeting the asset purchase fund (currently standing at 810 billion Dollars) was left unaltered. The BOJ also asserted that a pick-up in exports and signs of recovery in overseas economies have prevented the Japanese economy from weakening further.
Although Shirai’s proposal may have been quashed this time, if Haruhiko Kuroda – the Japanese PM’s pick for governor of the BOJ and a firm supporter of aggressive stimulus – gains power the measure may be more favourably considered.
As senior economist Masamichi Adachi asserts; ‘Shirai’s proposals show that the BOJ is already moving to Kuroda’s governorship. [Her presence] makes it more likely that the BOJ will add much more stimulus.
Kuroda recently stated that the central bank will bring 15 years of deflation to an end, no matter what steps need to be taken.
On the 19th March the current governor of the BOJ, Masaaki Shirakawa, and his two deputies will step down, and some industry experts have argued that if Kuroda is voted into the top-spot he won’t wait until April’s policy meeting to take action.
One such expert commented: ‘There is a possibility that the BOJ under Kuroda’s leadership will hold an emergency board meeting instead of waiting for the next scheduled meeting, to accelerate the process of monetary easing discussions.’
Given all the hype surrounding this candidate, if Kuroda fails to meet expectations for decisive actions it could trigger significant volatility in the marketplace.
The most influential pieces of Japanese data scheduled for release tomorrow include 4Q GDP and the nation’s trade balance figures.
The European Central Bank’s rate decision could also bring about Yen movement.