Technical Analysis

Possible BOJ Kuroda successor says widening of JGB YCC band will make policy change easier

Takehiko Nakao is a former senior Japanese Finance Ministry official. A former Vice Finance Minister for International Affairs (which means he was in charge of yen intervention decisions). He is being touted as a contender to replace Governor Haruhiko Kuroda next year when Kuroda’s term finishes in April 2023.

Reuters carry a piece with comments from Nakao:

  • “The BOJ has not succeeded so much in raising inflation expectations and bringing down real interest rates while side-effects became larger. I was thinking the current framework must be modified sooner or later,” he said.
  • “I am not sure about the reason for the latest action, but it may have an effect of alleviating burden for whoever succeeds Kuroda regarding all the negative shocks stemming from adjustments.
  • “It was good in a sense that it reduced the burdens of starting policy adjustment.”

Earlier today we received more information from the BOJ on it’s December JGB tolerance band widening decision:

USD/JPY gained ground after:

Since those post the Bank of Japan have conducted an unscheduled JBG buying operation. This is part of YCC and implementing loose policy.


Also, as an update, from the People’s Bank of China

  • injects a net 183bn yuan today

Which brings the total for the week so far to an injection of around 600bn yuan. Part of this will be related to ensuring ample liquidity over the new year.

Also, Hong Kong’s Hang Seng index reopened today. Its higher so far. Traders are liking the further reopening moves from China:

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