Kuroda Tweaks BOJ Yield Cap, Pushes Yen Value

Bank of Japan (BOJ) Gov. Haruhiko Kuroda has shocked markets by adjusting the central bank’s yield curve control program and sparking a sharp rise in the yen, just months before he is due to step down, The Japan Times reported.

Photo Insert: BOJ has not been in lockstep with Western central banks that have raised interest rates to stem the growth of money supply. With a sharp rise in the value of the yen, exports would be less attractive.

The BOJ will now allow Japan’s 10-year bond yields to rise to around 0.5%, up from the previous upper limit of 0.25% on their range of movement, according to a policy statement Tuesday, Toru Fujioka and Sumio Ito also reported for Bloomberg.

The central bank kept its target for the yield unchanged at around 0%. It also left its short-term interest rate at -0.1%.

In another development, Jiji Press also disclosed that Japan is set to slip behind Taiwan on economic strength per person. It has been a wretched year for the yen and its floundering value is destined to slash wealth in Japan, making it less prosperous than its neighbors.

BOJ had used bond sales to mop up liquidity but a low interest rate on those instruments has been a disincentive for buyers.

Kuroda had, for years, resisted raising the interest rate and maintained that its rate policy hews closely to the 2013 agreement which compels BOJ to cut the inflation rate to a manageable 2%, Nikkei Asia also disclosed.

BOJ has not been in lockstep with Western central banks that have raised interest rates to stem the growth of money supply. With a sharp rise in the value of the yen, exports would be less attractive.

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