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Singapore - The yen rose for a second day against the dollar after the Bank of Japan refrained from adding to its already unprecedented monetary stimulus at the end of a two-day meeting on Wednesday.
Japan’s currency gained versus most of its 16 major peers after BOJ Governor Haruhiko Kuroda kept his pledge to expand the monetary base at an annual pace of ¥80trn. All but two of 36 economists surveyed by Bloomberg had predicted policy would be unchanged.
Traders are shifting their focus to Kuroda’s briefing at 08:30 for any hints the central bank would adjust policy on October 30. That is the day picked by 15 of the economists polled for BOJ action.
“Today’s meeting showed the BOJ will not be swayed into action easily,” said Yuji Kameoka, chief currency strategist at Daiwa Securities in Tokyo. “Receding expectations for BOJ action will gradually weigh on the dollar.”
The yen rose 0.2% to ¥119.98/$ as of 08:06. Japan’s currency gained 0.3% to 135.14 versus the euro.
The BOJ’s key price gauge fell in August, along with industrial production, raising concern that Japan may have fallen back into a recession in the third quarter.
While more than a third of economists surveyed by Bloomberg think Kuroda may be able to avoid increasing stimulus altogether, a larger number expect him to boost asset purchases at the next meeting of his policy board.
BoJ wary
“We keep our view of no change as the economic outlook has not deteriorated sufficiently enough to justify further easing and as the BOJ is wary of its large asset purchases hitting limits on its bond buying in the next couple of years,” said Mansoor Mohi-uddin, a senior markets strategist at Royal Bank of Scotland Group Plc in Singapore. “We thus continue to like the yen.”
Kuroda said last week that he thought it was hard to see the economy contracting in the three months ended September, and that the combination of high corporate profits and the tight labor market augured well for stronger inflation.
“The dollar’s downside is limited by expectations for an additional easing on October 30,” said Jun Kato, senior fund manager in Tokyo at Shinkin Asset Management. “But the statement showed little change and if Kuroda maintains his tone, the probability of easing on October 30 will be low. ”
