Uncertainty surrounding the filling of top tier positions within the Bank of Japan has caused the odds of monetary stimulus being upped prior to the central bank’s next meeting to drop, allowing the Yen to gain.
The Japanese Yen exchange rate was in the region of 95.8000 Yen against the US Dollar as of 11:25 pm
For the second consecutive day the Yen climbed on its safe-haven rival the US Dollar. It climbed an additional 0.3 per cent on the ‘Greenback’ after modestly strengthening yesterday. The Yen also advanced by 0.4 per cent on the Euro and posted gains against all but one of its other currency rivals.
The Yen’s movement occurred after the Democratic Party of Japan declared that it would stand against Kikuo Iwata, a nominee for one of the two deputy governor positions. Iwata has made no secret of the fact that he supports aggressive monetary easing.
If Iwata fails to secure a post it lessens the odds of Haruhiko Kuroda, the Japanese PM’s pick for BOJ governor and another easing advocate, being able to push through more stimulus.
DJP policy chief Mitsuru Sakurai also commented yesterday that while the party supported Kuroda’s nomination for governor at the moment, they reserve the right to change their stance after he is re-nominated in April.
As the current Bank of Japan Governor Massaaki Shirakawa is leaving before the end of his term Kuroda will stand in as Governor from March 19th to April 8th.
In a note to clients economist Kyohei Morita commented: ‘It could be a close call depending on whether the DPJ takes a unified stance against Mr Iwata or allows individual members to vote as they wish.’
Meanwhile, the Your Party endorsed Iwata and rejected Nakaso.
Although the Yen has strengthened in the face of the current uncertainty, many industry experts are forecasting that the currency will return to its bearish trend before long.
Currency strategist Ian Stannard asserted: ‘The development surrounding Iwata’s nomination caused a bit of a pullback in the Dollar/Yen. We expect the Yen’s rebound to be short-lived because this issue doesn’t change Japan’s policy outlook. The Yen is likely to resume its weakness against the Dollar in coming days.’
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