JPY: Yen rebounds as BOJ actions highlights policy constraints – MUFG

By FXStreet FXStreet (Delhi) – Derek Halpenny, European Head of GMR at MUFG, suggests that the USD/JPY surged to an intra-day high of 123.56 in the immediate aftermath of the BOJ announced policy changes but the rebound of the yen since then reflects the fact that the steps taken by the BOJ were more technical in nature and indeed were taken in order to ensure the continued extent of monetary easing is maintained.

Key Quotes

“There were two elements to today’s announcement – 1) Measures to support firms’ investment in physical and human capital; 2) Measures to facilitate smooth implementation of QQE.

Under measure 1) the BOJ today decided to a) establish a new program for purchases of ETFs. (6-3 vote). The annual pace of buying in this program will be JPY 300bn and will augment the existing JPY 3.0trn program. ETF purchases will focus on those linked to the JPX-Nikkei Index 400. The program will begin in April 2016 and crucially aims to offset the sale of equities under a previous program the BOJ ran in order to maintain financial market stability. The BOJ also decided to b) enhance the fund-provisioning measure to support strengthening economic growth. Under this program ‘Firms that are …read more

Source:: FX Street