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29 May 2015
BoJ to announce further QQE initiatives this year - Rabobank
FXStreet (Bali) - According to Jane Foley, FX Strategist at Rabobank, the BoJ is likely to announce further QQE policy initiatives later this year.
Key Quotes
"While it is the MoF rather than the BoJ that sets Japan’s FX policy, we would ascribe the weaker tone of the yen since 2013 as being instrumental in the development of the central bank’s better outlook for the Japanese economy."
"On the sidelines of the G7 meeting BoJ Governor Kuroda was characteristically evasive when interviewed about the direction of the currency."
"His admission that the yen could appreciate in the future, however, are in tune with his outlook that Japan is on the cusp of breaking free of the mantles of deflation."
"While the BoJ has been reluctant to talk about an exit from QQE (probably for fear that any remarks could be interpreted as undermining its commitment to its policy), the BoJ will be keeping as capital 25% of last year’s profits, up from 20% last year and well above the 5% which it is legally required to hold. This is being viewed as a precursor to an exit from QQE."
"Having made large profits in the back of the bonds bought as part of its asset purchases programme, the BoJ could stand to make large losses when policy is unwound."
"It is our view that the BoJ will announce further QQE policy initiatives this year to drive home its commitment to its 2% inflation target. On the back of our view that the Fed will hike rates in December we expect USD/JPY to trend towards 126.00 in the coming months."
Key Quotes
"While it is the MoF rather than the BoJ that sets Japan’s FX policy, we would ascribe the weaker tone of the yen since 2013 as being instrumental in the development of the central bank’s better outlook for the Japanese economy."
"On the sidelines of the G7 meeting BoJ Governor Kuroda was characteristically evasive when interviewed about the direction of the currency."
"His admission that the yen could appreciate in the future, however, are in tune with his outlook that Japan is on the cusp of breaking free of the mantles of deflation."
"While the BoJ has been reluctant to talk about an exit from QQE (probably for fear that any remarks could be interpreted as undermining its commitment to its policy), the BoJ will be keeping as capital 25% of last year’s profits, up from 20% last year and well above the 5% which it is legally required to hold. This is being viewed as a precursor to an exit from QQE."
"Having made large profits in the back of the bonds bought as part of its asset purchases programme, the BoJ could stand to make large losses when policy is unwound."
"It is our view that the BoJ will announce further QQE policy initiatives this year to drive home its commitment to its 2% inflation target. On the back of our view that the Fed will hike rates in December we expect USD/JPY to trend towards 126.00 in the coming months."