- Koichi Hamada, a retired Yale University professor
The Japanese Yen advanced against the U.S. Dollar on Tuesday, with the corresponding currency couple moving 101.52, with the next key support located only around 101.42, as market is performing a correction to the downside before performing another rally. The risk-on sentiment, however, begin to wane after the Crimean vote, as Russian stocks rallied. Nevertheless, the Japanese currency remains highly vulnerable to the ongoing geopolitical tensions.
While developments in the global economy can become a massive drag, domestic economy is bracing for the looming April's sales tax hike. According to an aide to Shinzo Abe, the central bank should double its annual pace of bond purchases to 100 trillion yen, providing a fresh impetus to the world's third largest economy. Abe's advisor, Koichi Hamada considers May will be the appropriate time for introduction of the additional stimulus, as the 3% tax rise will damage the economy. Moreover, fourth quarter's growth of just 0.7% showed Abenomics did not manage to provide a significant support to the economy. The official projections are saying the economy will continue expanding at a moderate pace even after the tax increase, as Haruhiko Kuroda showed his readiness to inject additional stimulus if need. BNP Paribas pointed out the BoJ should increase the pace of its yearly stimulus up to 90 trillion yen, a figure equal to all new issuance.
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