- Kazuhiko Ogata, the chief Japan economist at Credit Agricole SA.
This week's comments from the Bank of Japan provoked a massive sell-off of the USD/JPY, as investors rushed to buy the Yen following the BoJ meeting, where policymakers said no additional easing was on the schedule. Soon after the announcement the pair plunged from 104.12 to 101.55; however, after that the pair bounced back above 102-mark. Market sentiment is strongly bullish (71%), but further depreciation can be expected amid disappointing labour market data from the U.S. and BoJ's confidence.
While some can be disappointed by the fact Kuroda decided not to pull the trigger during his first anniversary, his strategy proved one important fact. The Governor has shown that a single unprecedented expansion of the stimulus programme has more impact on the economy rather than a series of smaller injections and his latest decision suggests he will prove it again. Since April 2013, when Kuroda announced his stimulus programme, the Japanese Yen plunged more than 9%. On the contrary, the Yen advanced around 3% during two years when the same measure was introduced in October 2010 by the former Governor Masaaki Shirakawa. The only difference was that Shirakawa launched a smaller asset-purchase programme that was expanded seven times before the central bank decided to stick to the unlimited easing.
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