Japan's central bank tweaks monetary policy; yen strengthens

sustained two percent inflation, seen as necessary for growth

It isn’t though.

Too early to know what this means for the money printing, but the BOJ just racked up I guess more than a trillion in extra unrealized losses on top of those reported yesterday.

And the government’s reckless spending has a little pressure to be reined in, as those rates will divert more tax revenues to servicing the quadrillion of debt.

Crafty move by Kuroda. His ultra-loose, near zero rate policy remains in place, as the caps dont change, but he communicates a more "flexible" stance to the political and social circles, in a bid to assuage their concerns. Yen just rose to 133.

Apparently JGB futures on the Osaka exchange were limit down, trading halt. Makes for an interesting Christmas!

Currency manipulation! Nothing more!

Yeah, whatever, just buy time. Eventually the Fed will hold or reduce rates and we'll be back at 120 or so again.

"But....but... it's going to 200!" stopped the second the Fed announced the already-priced-in future increases in the rate weren't likely. That's why we saw the move from 150 back to 135. A 10% recovery ain't no profit taking.

More bond purchases by the BOJ to defend its YCC under the tweak. That means more of Japan's debt will be held in the public sector. The doomsayers will be out in force!

@fxgai: Yes, it was, but only 2bp lower which stopped it out for ten minutes. Needs a full 3bp to stop out for the remainder of trading day. Ended up -1.72bp lower. But feels like going to lower in the evening session.

@Eastman: No idea what you talking about have you?

Who cares, that’s only paper math. That affects only a very few ultra rich people, and only those among them who really have traded something. As long as no one really buys or sells his stocks or currencies, then one, the currency goes up 3% and the other one, the N225 index shares, down 3% , and all that only on paper or in theory and nothing of significance happens to anyone’s portfolios.

This is nothing to do with the ultra rich Sven.

I don't know what you looking at @Eastman - but its printing at 133.20 right now.

I'm sorry mate, but you lack the fundamental understanding of whats happened today.

.....but the 'its going to 200' crowd have now been firmly silenced. If the Fed slow down,then yes. we will be back to the 120-125 range sooner rather than later.

It doesn't matter. Japan's REER still declines.

https://www.project-syndicate.org/commentary/japan-weak-productivity-low-real-effective-exchange-rate-by-takatoshi-ito-2022-03

It is really the gist of the weak Yen's damage to the country permanently. Japan's productivity is the lowest since 1970.

https://japannews.yomiuri.co.jp/business/economy/20221220-78590/

For the yen to appreciate significantly, the decline of the crude oil following the end of the war in Ukraine is necessary. Well, even without a drop in the oil market, I think the yen will appreciate to 125 per dollar after Kuroda steps down.

Eastman:

Clearly you don't understand the JGB market and the reason why FX is moving around. We can all sit there and watch spot go up and down.

and spot was above 137 when I walked into the room this morning.

Ganbare samurai Yen!!

4% pump vs dollar

So 47 top economists had no clue that this was coming from Japan, and normal day to day person is supposed to understand what Japan is trying to do.

All I care about is the interest rate on my home loan, and how much things cost.

At least the exchange rates are settling down a bit.

Kuroda is just a clown.

There were some clips on TV of him saying last June that widening the band within which 10Y JGB yields may fluctuate would be a rate hike, but at today’s presser he was saying the exact opposite. Whatever he says is just to try to save face.

So no wonder 47 economists didn’t guess it, the man is a loony.

Moreover, there is a similar concern in some other countries, but these central bankers are akin to a cancer in the economy, and their actions are having and outsized influence on the rest of the economy.

What the BOJ has been doing also violates the intent of the law. An article in the Nikkei this week noted that on the day of a recent JGB auction, more than half of the freshly issued JGBs had been snapped up by the BOJ on the same day. Yet the law prohibits the BOJ from financing the government. (If the police catch me riding someone else’s missing bicycle, sorry for me, but the police are going to conclude that I stole it, no matter what story I might present to dispute that and explain how I ended up on someone else’s missing bicycle.) The BOJ is a criminal operation, currently at large.

At least the yen has currently strengthened a bit more to give some further reprieve to us yen earners. Still a far cry from the rate of around 115 at the start the year, but happy to take what we can get while it lasts.

Variable rates home loans will see monthly repayments rise, and new fixed rate loans will start at higher rates too, but housing prices have already increased thanks to the dopey policy of inflation price instability as it was.

I should have waited a few days before exchanging my yen for Thai baht. Thats where I am now in case anyone cares. Phuket. Yup.

The headline is a little misleading, since monetary policy is the responsibility of the Finance Ministry.

Currency manipulation! Nothing more!

That's right, the yen is in the toilet and soon there will be a giant flush.

I'm guessing this is good for most people here. For someone like me that gets most money from abroad it's currently bad, but even when it's good I just hate this extreme back and forth, stresses me out.

The headline is a little misleading, since monetary policy is the responsibility of the Finance Ministry.

The headline is correct enough, the Finance Ministry is responsible for currency policy (e.g. whether to buy / sell yen), not monetary policy (interest rates). But there is a blurry line… monetary policy evidently has large impact on currency movements.

I wrote earlier,

Variable rates home loans will see monthly repayments rise

My mistake here. This is apparently not so much the case. (Still, who knows what the central planners will do in future that may affect them too)