Tue, Feb 07, 2023 page10

• Yen slumps amid BOJ head report

  • Bloomberg
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  The Japanese government has approached Bank of Japan (BOJ) Deputy Governor Masayoshi Amamiya about succeeding Haruhiko Kuroda at the helm of the central bank, a Nikkei report that sent the yen tumbling.

  Japan’s deputy government spokesman later refuted the report, saying it was not based on fact, but the currency remained weaker suggesting that some investors believed it had substance.

  Amamiya is a longtime heavyweight at the BOJ, and has been instrumental in formulating the bank’s large-scale stimulus program under Kuroda. He is seen by market players as the closest to a continuity candidate among the likely replacements.

  

  A man walks in front of the Bank of Japan in Tokyo on Jan. 18.

  Photo: REUTERS

  The report said that the government is in the final stage of arranging its nominations, citing government and ruling coalition officials.

  The central bank said it was not in a position to comment on the nomination report.

  The Japanese currency fell about 1 percent past the ￥132.50 per US dollar level yesterday in early trading, its lowest since Jan. 12, on the assumption that ultra-easy monetary policy is more likely to endure if one of its architects succeeds Kuroda.

  

  Bank of Japan Deputy Governor Masayoshi Amamiya speaks at an event in Tokyo on July 5, 2019.

  Photo: REUTERS

  Japan’s benchmark 10-year yield edged higher amid a selloff in global bonds, a move that also suggests traders are reluctant to abandon their bets on BOJ policy tweaks, regardless of who becomes the next governor.

  BOJ watchers are aware that local media reports on central bank personnel changes should be treated cautiously, as in the past the government went with other candidates in the face of intense criticism for leaking names before an official nomination.

  Japanese Deputy Chief Cabinet Secretary Yoshihiko Isozaki said the government had not approached Amamiya, offering the strongest rebuttal of the report.

  Japanese Finance Minister Shunichi Suzuki yesterday said he had not heard anything about the BOJ nomination.

  Amamiya did not respond to an inquiry from reporters about whether he was approached for the role.

  Japanese Prime Minister Fumio Kishida said the nomination for governor would come this month, and the government would also name its nominees for two deputy governor positions.

  “The chances of rejecting current policy have become slim,” Daiwa Securities Group Inc chief economist Toru Suehiro wrote in a note.

  “While the scrapping of yield curve control is possible once the stabilization of bond market is confirmed, a clear rate hike move like ending the negative rate seems unlikely,” Suerhiro said.

  Should that view prevail among investors, the yen is likely to stay under pressure even if a BOJ led by Amamiya does not rule out the possibility of a policy shift.

  “Amamiya is the most dovish among potential candidates,” Resona Holdings Inc chief strategist Shinsuke Kajita said in Tokyo.

  “Dollar-yen may rally toward a year-to-date high of 134.77, as a sharp shift in monetary policy looks unlikely in the near term. Although even Amamiya wouldn’t be able to completely put out speculation of a future policy change,” Kajita added.

  Kuroda is scheduled to step down as governor on April 8 after the longest stint running the central bank in its 140-year history. He has been instrumental in pushing one of the most ambitious monetary stimulus programs of modern times — and the 67-year-old Amamiya has been a key figure in helping design BOJ policies.

  Choosing Amamiya would signal Kishida’s desire for continuity and an ability to respond to conditions with flexibility.

  It is important to have stability in finance and macroeconomic policies, Japanese Deputy Chief Cabinet Secretary Seiji Kihara said on Sunday.
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