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  • BOJ Eyes Expanding Cheap Loans To Spur Bank Lending

    From wsj.com

    Few Bank of Japan8301.TO -2.07% watchers expect the central bank to tweak its monetary policy when its board meets next week, but the members are likely to consider expanding a pair of lending programs they see as supporting the BOJ’s efforts to achieve a stable 2% inflation target. To help get the economy out of 15 years of deflation, the BOJ wants commercial banks to reduce the amount of cash parked in safe Japanese government bonds and increase exposure to riskier assets such as loans. Under the two programs, the BOJ offers loans at an annual interest rate of 0.1% to commercial banks that increase lending to ... (full story)

  • Post #1
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  • Edited Feb 14, 2014 3:33am Feb 13, 2014 11:56pm | Edited Feb 14, 2014 3:33am
So, can we see most Yen pairs rally up making new highs this week and the next week ahead as well?

I think the EUR/JPY is one of the most important pairs that will get affected by these data. I think that expanding the cheap loans of BOJ to spur bank lending will push the pair up to reach 142.06 or higher than that during the next week easily.

Do anyone agree with me or comment to share our point of view?
  • Post #2
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  • Edited at 2:46am Feb 14, 2014 2:24am | Edited at 2:46am
No, it's time for yen to go stronger, USDJPY around 99.986, maybe even more as well as EURJPY below 136.000. Lending stimulus doesn't always mean it is aiming for a weaker currency. Also, look the real condition of CNY, this is one of the biggest factors for the JPY movement.
First, thank you very much Ognen for sharing your thoughts with me.

But, why is it time for Yen to get stronger?

As well, could you please spot the light a little bit on the relationship between the Yen and the real conditions of the Chinese Yuan CNY that causes the yen to soar up against its counterparts?

I think that Japan will get the most out of the risk appetite due to some macroeconomics data of the Euro area to weaken its currency much more.

I am waiting for your reply to clarify the view to me.
  • Post #4
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  • Edited at 5:03am Feb 14, 2014 4:51am | Edited at 5:03am
Look at the simple side of the economy, Japan imports mostly from China, and that is machinery and other equipment as well as food and raw materials. Oil as a main engine to its economy is imported from the Middle East countries mostly. This means if China is good, Japan is good and JPY is stronger.

What is up to money lending, BOJ wants to stimulate commercial banks by giving them 0.1% loan interest to to support the domestic economy and stimulate the internal spending. This means more money and stronger currency. It will be a kind of a disinflation.

P.S. Also notice from near the end of December 2013 the trend started to change. As a result you will see that Japan is having slow recovery of its exports, but their main concern started to be the internal spending.
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  • Posted: Feb 13, 2014 10:35pm
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     Newsstand
    Category: Fundamental Analysis
    Comments: 4  /  Views: 2,382