The new easing plan from the Bank of Japan has the yen dropping rapidly today. Yen is down against its major counterparts today as Japanese leaders announce a very aggressive easing plan.
Among the pledges made by Prime Minister Shinzo Abe during his campaign was one to tackle the decades-long economic stagnation in Japan. The new Bank of Japan head, Haruhiko Kuroda, seemed to be the perfect fit for that goal.
Following Kuroda’s first meeting in charge of the BOJ, it is clear that he really is the right guy for the easing job. Kuroda has announced a very ambitious plan to attack deflation by purchasing 7.5 trillion yen in bonds each month. The monetary base should double fairly rapidly at that rate (within two years).
On top of that, the money-market operations have been switched to the monetary base from an overnight call rate.
The news has the yen falling rapidly — and Japanese stocks are surging — as Forex traders contemplate the huge influx of yen into the Japanese economy. The Bank of Japan has been involved in quantitative easing since 2001, and this is the biggest easing attempt yet.
At 13:51 GMT USD/JPY is up to 95.6500 from the open at 93.0400. EUR/JPY is also higher, up to 122.8555 from the open at 119.5550. GBP/JPY is up to 144.8165 from the open at 140.7750.
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