Japanese Yen Bounces Report Kazuo Ueda to change into subsequent central financial institution governor
People cross a street in the Ginza district of Tokyo. The Bank of Japan left monetary policy unchanged on Wednesday.
Philip Fong | AFP | Getty Images
The Japanese yen rose against both Euro And U.S. dollar on Friday, after a Nikkei report said Kazuo Ueda will be named the next Bank of Japan governor.
Economist Ueda is a former member of the central bank’s policy board.
The dollar fell 1% against the yen on the day to 130.28, about a week low, while the euro also fell 1% to 139.9, a three-week low.
Ueda would replace Haruhiko Kuroda, whose term began on March 20, 2013 and will end on April 8, 2023. Kuroda has overseen the BOJ’s policy of maintaining its ultra-low interest rates while other major central banks have attempted to fight inflation.
The yen fell to more than 20-year lows against the US dollar in 2022 on interest rate differentials and as investors flocked to the dollar’s safe haven on market volatility.
Although a weaker yen is generally seen as a boon to Japanese policymakers trying to boost inflation, the magnitude of the depreciation and price pressures on consumers have forced multiple interventions to support the currency.
Kuroda has defended the BOJ’s policy of yield curve control, which keeps its yield curve tolerance in a tight range. The BOJ shook global markets in December when it raised the 10-year Japanese government bond yield by 50 basis points on either side of its 0% target from 25 basis points.
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US Dollar versus Japanese Yen.
On Tuesday, the government will formally appoint Ueda as deputy governors along with BOJ Executive Director Shinichi Uchida and former Financial Services Agency chief Ryozo Himino, according to the Nikkei report.
Jane Foley, head of FX strategy at Rabobank London, said Ueda was not considered a leading candidate by many BOJs Observer.
“While the market is reacting to the fact that the new governor is not [Bank of Japan Deputy Governor Masayoshi] Amaniya — a well-known dove, we suspect BoJ policy won’t be too different going forward,” she told CNBC in emailed comments.
“The BoJ has attempted to support inflation and while conditions are building for some stimulus reductions, aggressive change is unlikely to materialise.”
According to the Nikkei report, Amamiya was approached for the job and turned down.
“Ueda appears to be a very different guy from Kuroda in that he is an academic who clearly bases his policy on actual economic fundamentals and values conversations with the market,” said Hiroaki Muto, economist at Sumitomo Life Insurance Co., in a note published by Reuters.
However, Muto added that he might not be a “super hawkish guy” – so “normalization” would happen very slowly.