Bank of Japan sticks to easing despite yen pressure

So 22400yen ($20 billion dollars divided by population of Japan) of my taxes was used to pay for interventions last month, but the yen still slid against the dollar.

Would have preferred a cash hand out.

"The rate of increase is then expected to decelerate toward the middle of fiscal 2023,"

The Fed and the ECB were also saying "inflation is transitory". We now know how how wrong they were. Will Kuroda wait passively until Japan falls in the same situation?

Once inflation takes off very difficult to stop it.

So 22400yen ($20 billion dollars divided by population of Japan) of my taxes was used to pay for interventions last month,

The gov't didn't SPEND the money; it simply traded some of its dollar hoard for yen - and good timing: with a weak yen, its dollar reserves went further. This kind of thing happens all the time.

@vendingmachinemusic: No disrespect, - but you really shouldn't comment on this with remarks like that.

Yes, who wouldn’t prefer an essential cash hand out instead of such senseless burning of all the tons of money into nothing? In addition it would then flow back immediately into economy, especially all the smaller businesses already which are already more than under usual pressure because corona stricken for past years and years to come and could keep their staff or even raise the wages a bit.

The gov't didn't SPEND the money; it simply traded some of its dollar hoard for yen

There's another way of looking at it.

Japan had dollars, and traded it for Monopoly money.

Japan is a nation of savers. These super low rates are actually just allowing the banks to have free money to lend since they pay just about nothing to their depositors.

These interventions in the foreign exchange market won’t stop the fall of the yen. The basis of the fall is the difference of interest rates. Until that changes any respite in the yen’s fall from intervention will be temporary.

Well, I don't think there is a single country in the world that has coherent and sensible policies, economic or otherwise, but you can usually discern some kind of attack on the lower people and the poor in all of them. It's systematic now and barely hidden. And, furthermore, tells us exactly who is really in charge.

Kuroda is a hero here by not bending to outside forces.

Always easy to go with the flow.

150 is the right number, Japan will adjust to it at some point.

an economic stimulus package that local media said could be worth $200 billion to cushion the impact of inflation and a weak yen.

Such a stimulus package - further debt financed by money printing - will only contribute to further undesired inflation and a weaker yen.

Almost all trading is done by computers. It doesn't care about "hints" and such.

Some short trading strategies may be done by computers but when it comes to repositioning of massive investment flows it is not the case.

I fully agree with Marcelito. Kuroda could indeed have an impact on the market by hinting he may change his policy even though he does not actually hike. But on the contrary, he recently gave a forward guidance saying basically that he will not change the ultra-accommodative policy for the next 2 to 3 years. Silly.

fxgai:

Such a stimulus package - further debt financed by money printing - will only contribute to further undesired inflation and a weaker yen.

Japanese inflation is one of the lowest in developed countries. Weaker yen is preferable to Japan.

Current inflation in Japan is caused by cost-push. That's why Core Core Inflation (without energy and food) is only 1.8 while general inflation is 3.0. What Japan need is higher inflation caused by demand-pull. Therefore stimulus package that eases energy cost for the people is a right direction.

Weakening yen is also preferable for Japan, as long as it is not too fast (because companies cannot adjust in time). Since the direction of yen's depreciation itself is correct, pushsing down the brake pedal by occasional interventions is also a good policy.

Weakening yen will encourage domestic production, which in turn help grow income and spending; thereby increasing demand-pull inflation.

Over all, Kuroda is doing a good job.

John Kennedy:

These interventions in the foreign exchange market won’t stop the fall of the yen.

The purpose of recent currency intervention is NOT to stop yen's depreciation. It is to SLOW DOWN the pace. The currency depreciation itself is considered preferable to Japanese economy.

"The recent depreciation of the yen is rapid and one-sided. This type of yen weakness makes it difficult for companies to draw up business plans and raises uncertainty so it is negative for the economy and unfavorable," the BOJ chief said.

*He also said, however, if the weakening of the yen is stable, it is a plus for the economy.*

(Kyodo News)

https://english.kyodonews.net/news/2022/10/63b794d70a88-update1-rapid-one-sided-yen-fall-negative-for-japan-economy-boj-chief.html

vendingmachinemusic:

So 22400yen ($20 billion dollars divided by population of Japan) of my taxes was used to pay for interventions last month, but the yen still slid against the dollar.

The purpose of the recent interventions is not to STOP or REVERSE yen's fall. It is to SLOW DOWN. Weakening of yen itself is considered preferable to Japanese economy.

Before the intervention, yen fell about 8.5% within a month period. After the intervention, it fell ony 1.0% in a month and half period. The rate of depreciation has certainly fallen as expected by the interventions.

Japan has no natural resources. Any national production will come to a halt due to the unsustainable cost of energy and resources.

Yen depreciation is undesirable.

California just moved into fourth place, replacing Germany.

Ummm.........no, it didn’t. Overinflated asset values means that in terms of purchasing power, it ranks only 11th in the world. And with the repricing of assets currently underway, even that ranking may not hold for long.

Japan has no natural resources. Any national production will come to a halt due to the unsustainable cost of energy and resources.

Unfortunately, LDP elites and pro-Abe internet trolls (Moonies) don't accept this reality as fact. They live in an alternate universe.

lunatic:

Japan has no natural resources. Any national production will come to a halt due to the unsustainable cost of energy and resources.

Yen depreciation is undesirable.

In general, Japan exports more than it imports. Therefore, depreciation of its currency works better for Japan - unlike USA.

When Japanese yen was too strong, Japanese companies started to invest in oversea productions. Japanese automobile companies, for example, make more cars oversea than domestically today.

Depreciation of Japanese yen will encourage domestic production. Iris Ohyama, for example, announced recently to increase domestic prouction. It also encourages foreign companies to invest in Japan. Google, for example, just announced to invest in Japan for a new datacenter.

More domestic production means more income for people in Japan.

[I]f the weakening of the yen is stable, it is a plus for the economy. (Kuroda, BOJ)

Weakening yen will encourage domestic production

Weakening yen makes raw materials more expensive, so you are unfortunately wrong.

Almost all trading is done by computers. It doesn't care about "hints" and such.

This is partly true. You can tell by the spikes in the market before and after FED announcements and such that news still has an important impact. That is unless these computers are fully functioning AI.

Japanese inflation is one of the lowest in developed countries.

True.

But it could be much closer to 0%, rather than 50% above the BOJ’s price instability target of 2% inflation.

Weaker yen is preferable to Japan.

That’s a sweeping generalization.

A strong currency is strong for good reasons; a weak currency is weak for bad reasons.

What Japan need is higher inflation caused by demand-pull.

I am not one for central planning.

Therefore stimulus package that eases energy cost for the people is a right direction.

Well how many stimulus packages have been a roaring success for Japan over the years I have been here. Can’t think of any.

All I see now is a mountain of public debt and the “best” way to pay it off is to debauch the currency. This is not such a big deal for the well-to-do who can shelter their personal wealth in foreign assets and the like, but it is a disaster for the poor and needy of little means, and those who know no better than to save their yen.

Since the direction of yen's depreciation itself is correct

It’s not correct.

pushsing down the brake pedal by occasional interventions is also a good policy.

No it is nonsensical, to on one hand to print excessive amounts of yen, and then on the other hand suck up some of those yen by giving away valuable dollars.

Over all, Kuroda is doing a good job.

Please tell me your whole comment was sarcasm?