The Japanese Yen has declined the majority of its peers for a second day as traders assumed that the Bank of Japan’s new governor, Haruhiko Kuroda, will add to stimulus measures as soon as next week in a bid to end deflation in the country.
Tomorrow Huroda is set to appear before the Japanese parliament, after telling lawmakers yesterday that he intends to achieve 2% annual inflation over the course of the next two years.
“Traders are very comfortable selling the Yen, and that won’t change after the policy meeting,” said Kikuko Takeda, a senior currency economist at Bank of Tokyo-Mitsubishi UFJ Ltd, referring to the BOJ gathering on April 3-4.
“Kuroda will be focused on how to control market expectations over the long term. That may be an even more pressing challenge for the BOJ than aggressive easing.”
Kuroda’s aim has been met with scepticism from other economists with the former Bank of Japan governor Kazumasa Iwata predicting that his successor will fail to meet his goals.
Iwata said in an interview yesterday: “It’s impossible to achieve 2 percent inflation in two years,” claiming later that even five years would not be easy.
So far this year the Yen has declined by more than 8% against the US Dollar. Elsewhere the Yen was supported in Asia as investors sought a safe haven following renewed threats from North Korea to attack South Korea, the US and mainland Japan. North Korean forces are reported to have gone to their highest level of combat readiness but it is doubtful they will start a conflict.
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