Yen strengthens as Kuroda shoots down helicopter possibilities

The Japanese Yen has strengthened more than 1 percent against the dollar after a BBC Radio 4 program was aired, where Mr. Kruroda poured cold water over the possibility of introducing unconventional “helicopter money” in Japan. He said that there is no need and no possibility for Bank of Japan to policies to directly inject stimulus into the veins of the economy or to the pockets of consumers. Bank of Japan (BoJ) is set to announce policy decision next week and it will be Bank of Japan’s (BoJ) first policy meeting since the UK referendum.

Speculations over further easing from Bank of Japan (BoJ) and the introduction of helicopter policies went rampant after former Federal Reserve chairman Ben Bernanke visited the central bank of Japan and met Prime Minister Shinzo Abe. In the morning the yen was down to 107.5 per dollar but after the broadcast, it was trading as high as 105.4 per dollar. It has now somewhat weakened and trading at 106.4 per dollar.

The yen is still likely to remain weak because,

• The broadcast was recorded in June, before the referendum.
• In the broadcast, Kuroda kept the policy areas open. He said, “We can expand the quantity as well as further change and expand the quality and also we can further deepen the negative territory on the interest rate imposed on part of the current account deposit by commercial banks.”
• He also shrugged off the idea of any limitation on monetary policy, “I don’t think there is any significant limitation on further easing of monetary conditions in Japan if necessary.”