Bank of Japan crushes the yen

04/04/2013 6:56 pm EST


Jim Jubak

Founder and Editor,

New Bank of Japan Governor Haruhiko Kuroda didn’t disappoint today. After his first meeting as head of Japan’s central bank, Kuroda announced that the bank will buy 7.5 trillion yen of bonds a month, significantly more than the 5.2 trillion yen projection by economists surveyed by Bloomberg. The bank will also double Japan’s monetary base within two years.

And finally Kuroda suspended the Bank of Japan’s “banknote rule.” Under the rule, the central bank had pledged to keep the value of its bond holdings below the amount of cash in circulation (excluding securities held in its asset-purchase program.) That rule is “temporarily suspended,” the Bank of Japan announced.

The Tokyo market, which had sold off yesterday on worries that Kuroda might be timid in his first moves, rallied, climbing 2.2% overnight. With the massive program of bond buying certain to put downward pressure on Japan’s currency, the yen fell 3.23% against the dollar to 96.14.

Meanwhile in Frankfurt, the European Central Bank kept its benchmark interest rate at 0.75%.

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