- Yoshimasa Maruyama, chief economist at Itochu Corp.
The Japanese Yen appreciated for a third straight day on Tuesday, while a measure of implied rate swings in currency markets plunged to its seven-year low, as the Bank of Japan stayed pat on its monetary policy. The USD/JPY pair refused to move above 104-mark, suggesting there is a strong resistance level, while from the downside the pair is bounded by a strong support at 102.68.
First of all, we would like to congratulate Haruhiko Kuroda with his first anniversary at the BoJ and wish him to stay as confident as he was during the whole year. As it was widely expected, Japanese central bank maintained the current pace of the stimulus programme, sticking to its upbeat assessment of the economy, as the impact of the sales tax is still unclear. The central bank cited a pickup in private investment and stronger industrial production. Despite central bank's confidence in the chosen course, economists believe Kuroda will pull the trigger in July. Both Kuroda and Abe need to sustain confidence in Abenomics as the tax hike made on April 1 will be a burden on the consumption, while a 5.5% drop in the Yen failed to boost export volumes. On April 30 the BoJ will hold a second meeting, when policymakers will unveil its latest growth and inflation projections. The report is likely to confirm Kuroda sees inflation reaching the 2% inflation within a planned period of time.
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