YEN GETS CLOBBERED ON BOJ BUYING SPREE
The Japanese Yen dropped over 2% today against the U.S. dollar as the Bank of Japan (BOJ) announced plans for to step up bond purchases massively. According to Bloomberg.com, “The BOJ plans to purchase 7.5 trillion yen ($78.6 billion) of bonds a month and double the monetary base, which includes cash in circulation, in two years, the central bank said in Tokyo today. That exceeded economists’ median estimate of 5.2 trillion yen a month and is the biggest move since quantitative easing began in 2001.”
Looks like the BOJ will go head to head with the U.S. Federal Reserve to determine who will flood the market with more money.
The Bloomberg article continues, “ The BOJ said it changed the target for money-market operations from the overnight call rate to the monetary base – cash in circulation and the money that financial institutions have on deposit at the central bank. It predicts the measure will grow to 270 trillion yen by the end of 2014. The BOJ dropped limits on the maturities of debt it buys.”
Will this move reinflate the economy? Will the Japanese stock market surge back to levels not seen in over 20 years? Only time will tell, but let’s hope that they are not creating an asset bubble.
The information contained in this article reflects the opinion of the author and not necessarily the opinion of Portfolio Resources Group, Inc. or its affiliates.
Aaron Katsman is a licensed financial professional both in the United States and Israel, and helps people who open investment accounts in the United States. Securities are offered through Portfolio Resources Group, Inc. a registered broker dealer, Member FINRA, SIPC, MSRB,SIFMA. For more information, call (02) 624-0995, visit www.aaronkatsman.com or email aaron@lighthousecapital.co.il.
