Yen hits 33-month lows vs. dollar on BOJ report
Reuters and AFPLONDON,/TOKYO--The yen hit a 33-month low against the U.S. dollar on Monday as the likelihood of sharply easier monetary policy in Japan grew, while Italian stocks and bonds gained in anticipation of the results of national elections.
February 26, 2013, 12:15 am TWN
Japan's currency's resumed its recent slide after reports emerged that the government would nominate Haruhiko Kuroda, a vocal advocate of aggressive monetary expansion, to be the next governor at the Bank of Japan (BOJ).
A source familiar with the process told Reuters that an academic critical of central bank efforts to fight deflation would also be named as one of two new deputy governors.
“Both those candidates are in favor of more aggressive BOJ easing, and that is weighing upon the yen,” said Lee Hardman, currency economist at Bank of Tokyo Mitsubishi.
The yen hit a low of 94.77 against the U.S. dollar, a level not seen since May 2010 before recovering to around 94 yen. The euro jumped to a high of 125.36 yen and then settled at around 124.37, well below a 34-month peak of 127.71 set early this month.
The yen had already fallen around 20 percent against the U.S. dollar over the past three months or so on expectations Japan would take more aggressive measures to defeat its persistent deflation and boost its recession-hit economy.
Kuroda's reported nomination welcomed
Japan's finance minister and a top business leader on Monday welcomed a reported move by Prime Minister Shinzo Abe to nominate Haruhiko Kuroda.
It would be “a correct choice,” minister Taro Aso told reporters in Seoul about the plan after meeting newly inaugurated South Korean President Park Geun-Hye, according to Jiji Press news agency.
Japanese media reported that Abe was set to submit his nomination of the Asian Development Bank (ADB) chief to parliament for approval this week.
The markets liked the thought of a man known to be in favor of further monetary easing, with the news sending the dollar above 94 yen in Asian trade from 93.37 yen in New York on Friday.
“Mr Kuroda is well known internationally and perfectly fit for the post,” Hiromasa Yonekura, head of the powerful lobby the Japan Business Federation (Keidanren), told a news conference.
He cited Kuroda's experience as a vice finance minister for international affairs, a post in charge of foreign exchange policy.
Kuroda is known as an advocate of aggressive monetary easing to overcome Japan's hard-wired deflation, a stance in line with Abe's economic policy.
“As he has directed and managed the ADB, he is fully capable of moving an organisation,” said Yonekura.
The likelihood of more aggressive easing by Japan comes after two top U.S. Federal Reserve officials on Friday argued in favor of ultra-loose policies in an effort to counter concerns of an early end to its massive asset-buying program.
Markets are on edge about the Fed's plans ahead of testimony by Chairman Ben Bernanke to Congress on Tuesday and Wednesday, which is likely to center on how long the US$85 billion in monthly asset purchases will last.