Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Yen off six-week low after 'helicopter money' mania shot down

Published 07/21/2016, 11:20 PM
Updated 07/21/2016, 11:20 PM
© Reuters. A woman counts Japanese 10,000 yen notes in Tokyo, in this picture illustration

© Reuters. A woman counts Japanese 10,000 yen notes in Tokyo, in this picture illustration

By Hideyuki Sano

TOKYO (Reuters) - The yen hovered above six-week lows on Friday after comments from Bank of Japan Governor Haruhiko Kuroda dented speculation Japan may be preparing a radical "helicopter money" economic stimulus.

The yen bounced back to 105.88 yen per dollar from 107.49, its six-week low against the U.S. currency touched on Thursday.

The rebound was triggered by Kuroda's comments on a BBC Radio 4 interview on Thursday playing down the idea of helicopter money, essentially a policy of injecting cash directly to the economy in some form by printing money.

With Prime Minister Shinzo Abe crafting a massive spending package worth about $190 billion to bolster the economy, some speculators had bet the BOJ could be financing the additional spending - likened by economists to dropping large amounts of cash from a helicopter.

The BBC later said its interview with Kuroda had been conducted in mid-June, helping to cool the yen's gains.

But expectations that the BOJ will adopt easing steps at its policy meeting on Friday next week remained strong, whether those measures fall into the category of "helicopter money" or not, thus limiting the yen's gains.

"Certainly his comments have not dispelled expectations of easing. I suspect a rough consensus in the market is increase in buying of ETFs and REITs as well as 0.10 percentage point cut in interest rates," said Koichi Takamatsu, head of forex at Nomura Securities.

Few market players take Kuroda's words at face value after he introduced negative interest rates in January only days after he said publicly that he was not considering such measures.

A small number of market players, however, think the BOJ may opt to ease later to keep its dwindling fire power.

"I think the BOJ is more likely to ease in November when the government's supplementary budget will be ready, rather than now. I'm not sure if the BOJ feels it needs to act now, when even the Bank of England has not eased," said Minori Uchida, chief currency analyst at the Bank of Tokyo-Mitsubishi UFJ.

The dollar was steadier against other major currencies, with investors still trying to figure out how Britain's decision to leave the European Union will affect the U.S. economy and the policy of the U.S. Federal Reserve.

The dollar index stood at 96.917 (DXY) <=USD>, off Wednesday's 4-month peak of 97.323.

The euro was moving little against the dollar after the ECB held off on any immediate further easing of monetary policy on Thursday as expected.

The euro traded at $1.1028 , slightly above this week's low of $1.0980 but little changed from late U.S. levels on Thursday and is also almost flat on the week.

The British pound was also little changed at $1.3230 .

The New Zealand dollar was on a slippery slope after it had fallen to six-week low on Thursday as New Zealand's central bank said further rate cuts were likely as it sets its sights on the high New Zealand dollar and perilously low inflation.

That cemented expectations for easing at its Aug. 11 meeting.

© Reuters. A woman counts Japanese 10,000 yen notes in Tokyo, in this picture illustration

The kiwi stood at $0.6982 , having fallen to $0.6952 on Thursday.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.