adminThe yen sank against the dollar and the euro after the Bank of Japan, in its first meeting under a new governor, announced a raft of measures aimed at ending decades of deflation and dragging the economy out of years of insipid growth.
Tokyo jumped 2,20 percent, or 272,34 points, to 12 634,45. The Nikkei index had slumped as much as 2,3 percent in the morning, with dealers concerned new Bank of Japan governor Haruhiko Kuroda would fall short on promises to boost the economy.
Seoul fell 1.20 percent, or 23,77 points, to 1 959,45 after North Korea blocked access to its Kaesong joint industrial zone with South Korea for the second day running. There were also reports that Pyongyang has moved a medium-range missile to its east coast.
Sydney fell 0,89 percent, or 44,2 points, to close at 4 913,5. Hong Kong, Shanghai and Taipei were closed for a public holiday.
After a two-day meeting the Bank of Japan said it would embark on an aggressive spending programme, boosting asset purchases including Japanese government bonds, while pledging to meet a two percent inflation target within two years.
The moves would see the Bank of Japan “enter a new phase of monetary easing both in terms of quantity and quality”, it said in statement.
It also pointed to an uptick in Japan’s economy, which has suffered a mixed bag of data lately without any clear sign of a firm recovery. Yuji Saito, director of foreign exchange at Credit Agricole in Tokyo, called the news a “positive surprise” for markets.
And Junko Nishioka, chief economist at RBS Securities Japan, in a note: “The market had concerns about the Bank of Japan announcing any policy actions today, but the Bank of Japan’s decisions exceeded investor expectations.”
The appointment of Kuroda has sent the yen tumbling this year as he vowed big measures to achieve a 2 percent inflation goal to kick-start the economy.
However, investors began moving back into the unit recently amid fears the new governor would not deliver the aggressive policy he had promised.
Monetary easing tends to push down the value of a country’s currency as it means more cash floods into the market.
In afternoon forex trade, the dollar surged as high as 95,46 yen on the announcement, after sitting around 92,71 earlier in the day. The euro also jumped to 122,11 yen from 119,39 yen, but it fell to US$1,2800 from US$1,2845 after weak German services data.
US traders sold up after disappointing private sector jobs data and weak service sector growth figures. — AFP.
Online Reporter