BoJ chief nominee rules out foreign bonds buying

Some politicians and economists have said the central bank should adopt such measures as a policy option, which would likely push the value of the yen down further as it would require selling huge amounts of the unit to purchase foreign-denominated debt.

That could aggravate months-long criticism from abroad, particularly in Europe, that Tokyo was devaluing the unit to help exporters, risking a global currency war that would see rival nations try to push down their currencies.

Haruhiko Kuroda, a finance veteran expected to become Japan’s top central banker, told a parliamentary confirmation session yesterday that “there is no need to consider” foreign-bond buying as a policy option.

“It is the government’s responsibility to achieve stability in foreign exchange markets,” Kuroda added.
“It is not part of the BoJ’s duty as a central bank. Its duty is to stabilise prices.”

The BoJ routinely buys Japanese government bonds as a way to inject easy money into the market to help lift the economy, in a move similar to the US Federal Reserve’s quantitative easing programme.

Kuroda also said under his stewardship the BoJ would move to meet a two-percent inflation target that policymakers adopted in January, aimed at reversing years of falling prices that have crimped private spending and business investment.

The long-time BoJ critic said previous efforts by the bank to stoke the world’s third-largest economy have fallen short.
“Since monetary easing actions so far haven’t been sufficient, I will take every measure possible to achieve a 2 percent target if approved as governor,” Kuroda said. –AFP.