As they have done so many times in the past, the Bank of Japan’s policy makers disappointed some bearish investors which resulted in the currency’s firming rather falling. They announced, much as expected by analysts, that they would take up the 2% inflation target which had been proposed by the new Japanese government and move to open-ended asset purchases; however, the disappointment came when they said that that would begin in 2014 rather than immediately, which markets had been hopeful of.
One forex strategist in Singapore said that while the raising of the inflationary target was a significant step toward ending the country’s economic stagnation that the effect that the increase in the asset purchases should have had was mitigated by the delay in implementing the new policy. In theory, analysts say that the 2014 scheme will likely be at a pace that is significantly slower than the existing plan.
As reported at 12:25 p.m. (JST) in Tokyo, the USD/JPY pair was trading at 88.65 Yen, a loss of 0.1%; the U.S. Dollar skidded 1.1% yesterday following the BOJ announcement, the largest single day’s drop for the pair in nearly eight months and was well off Monday’s peak of 90.25 Yen, a 30-month peak.