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BoJ Decision Disappoints, Yen Surges On No FX Intervention Announcement

Tyler Durden's picture




 

The BoJ just released a decision to extend the 3 month lending program to 6 months, to expand the 6 month fixed rate facility to 30 trillion yen from 20 trillion, extended the maturity of QE, and kept the benchmark rate at 0.1%: in essence a nothingburger extension of QE, which has done miracles for the past 20 years. The key item, however, is that there was no direct mention of FX intervention by the BoJ, which was the silver bullet many had hoped for. As a result, the Yen is currently surging.

USDJPY below. Futures soon to follow:

More from Bloomberg:

The Bank of Japan expanded a bank- loan program, stepping up its monetary stimulus for the first time since March after the economy’s recovery weakened and the government pressured the central bank to act.

The BOJ will boost the amount of funds in the facility by 10 trillion yen ($116 billion) to a total of 30 trillion, the bank said in a statement after an emergency meeting in Tokyo. Governor Masaaki Shirakawa led the gathering after cutting short a U.S. trip in the wake of increasing calls from politicians for the BOJ to help stem a surge in the yen to a 15-year high.

Today’s decision reflects rising concern about growth in advanced economies that sent global stocks tumbling in the past three weeks. Federal Reserve Chairman Ben S. Bernanke three days ago signaled a willingness to implement further steps if needed to avert another U.S. recession, in a speech that triggered a gain in stocks and the dollar.

“The BOJ’s additional loosening alone may not be sufficient to reverse the market’s trend, but it could make it easier for the Japanese market to ride the waves of a global market recovery,” Takuji Aida, senior Japan economist at UBS AG in Tokyo, said before the announcement.

The bank-loan program that the BOJ is expanding was set up in early December in response to a November climb in the yen to the highest level since 1995. That mark was breached this month, when the currency hit 83.60 per dollar.

The yen recouped some of its losses after the announcement, trading at 85.55 as of 12:19 p.m. in Tokyo today. Any moves in the currency market today may be exaggerated by a U.K. holiday, closing the world’s biggest market for foreign-exchange trading.

                        Reacting to Yen

The extra 10 trillion yen unveiled today will be offered in six-month credit. The term for the other 20 trillion yen remains at three months. BOJ policy makers doubled the size of the bank- loan fund to 20 trillion yen in March. That decision also followed political pressure, with then Finance Minister Naoto Kan urging the central bank to adopt an inflation target to help end declines in consumer prices.

Kan, who is now prime minister and battling to keep the post following a challenge to the leadership of the ruling party, last week said “we are ready when necessary to take bold measures” in the currency market. Speaking to reporters Aug. 27 after meeting with business executives, he said he expected the Bank of Japan to take action “swiftly.”

In addition to the central bank’s move, Kan’s aides are compiling a stimulus package to buttress growth as consumer prices keep falling and prospects for export growth are hampered by slowing expansions in overseas economies. Kan will meet with Shirakawa today and then decide on the outline of his government’s economic stimulus plan, Chief Cabinet Secretary Yoshito Sengoku said at a regular press conference in Tokyo.

 

 

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Sun, 08/29/2010 - 23:27 | 552226 spekulatn
spekulatn's picture

Just kidding bitchez.

Sun, 08/29/2010 - 23:38 | 552243 themosmitsos
themosmitsos's picture

hahahahha! ;)

Asians are sneaky Bitchezzz

Mon, 08/30/2010 - 07:59 | 552546 Paper CRUSHer
Sun, 08/29/2010 - 23:31 | 552229 IrrationalMan
IrrationalMan's picture

QE FAIL

 

Also look at the ES vs AUD/JPY as it is now reconverging

Sun, 08/29/2010 - 23:30 | 552231 Boilermaker
Boilermaker's picture

Actually, that's interesting and a bit surprising.

S&P futures moved 2 handles down on the shock.

TD, man, you really do some great work.  I just wish it wasn't somewhat in vain due to the outrageous fraud.  The site is awesome (OK, less Leo...but still) and the best on the web, period.

OK, I'm hitting the keg-o-rator one more time and hitting the bed but...I still say the futures will be pumped to a full 10 handles by the time I wake up with a hangover.

Mon, 08/30/2010 - 02:49 | 552416 TraderTimm
TraderTimm's picture

Dude, you know it - zerohedge is a frickin lighthouse in the bay of financial bullshit. Rock on man.

 

Sun, 08/29/2010 - 23:32 | 552234 BeSosaNotTony
BeSosaNotTony's picture

Let's all sing together: Youuuuuuu don't know what you're doooooiiiiiiing

 

Not that this changes anything; how about we all stay the hell away from anything the BoJ ever touches. Ever. Except JPY longs--maybe, after my fourth old fashioned. Maybe. 

Sun, 08/29/2010 - 23:35 | 552237 Boilermaker
Boilermaker's picture

Old fashioned's...man, I paid my way through Purdue bartending and hated making those fuckers...unless you get it without the fruit wheel, in which case...well played.

The only thing worse than those were Gibsons...those onions are fucking nasty man...

Sun, 08/29/2010 - 23:35 | 552239 Lord Welligton
Lord Welligton's picture

So in the war of fiat who wins?

Because this is a war.

Anyone who thinks we are not at war is an idiot.

 

 

 

Sun, 08/29/2010 - 23:40 | 552240 Boilermaker
Boilermaker's picture

Actually, I think it's a version of MAD and there are only losers.

Besides, I think we can take the Japs.  They are generally smaller and lighter.  Granted, they are more radical but we have more people and nukes.  Furthermore...I think I'm off topic.

Sun, 08/29/2010 - 23:51 | 552260 Eric Cartman
Eric Cartman's picture

I take it you didn't watch the little league world series today. The "Japs" are some serious bad ass mother fuckers. They are not to be fucked with. They fuck shit up and make us Americans look like little bitch cry babies. 

Mon, 08/30/2010 - 01:02 | 552349 -Michelle-
Mon, 08/30/2010 - 08:08 | 552585 firstdivision
firstdivision's picture

But it is 2010....

Sun, 08/29/2010 - 23:36 | 552241 Hang The Fed
Hang The Fed's picture

Central Banks...engineering your destruction since their inception.

Sun, 08/29/2010 - 23:44 | 552249 Boilermaker
Boilermaker's picture

WSJ is reporting that the BOJ loosened montary policy by 'pulling a Ben' and lengthening the timeline for low interest loans for money markets....

 

Sun, 08/29/2010 - 23:46 | 552251 tom a taxpayer
tom a taxpayer's picture

 

World yens for the yen

Japan yo-yos yen

Ben hollers for the dollar

 

Mon, 08/30/2010 - 18:47 | 553871 iota
iota's picture

You forgot the kigo.

Mon, 08/30/2010 - 00:01 | 552280 Perseid.Rocks
Perseid.Rocks's picture

..and where does this additional (stimulus) money come from, the banks ? Where do they get it.. is it given to them by the Fed ? Where does the Fed get that money.. it invents it out of thin air increasing its balance sheet ? Just tryin to get a handle on this whole borrow and spend thing.

Mon, 08/30/2010 - 06:35 | 552530 nmewn
nmewn's picture

"and where does this additional (stimulus) money come from"

It's an elf, riding a unicorn, sprinkling pixie dust, along the road to nirvana, which always lies just over the next horizon.

Mon, 08/30/2010 - 00:02 | 552274 CONners
CONners's picture

I wondered why the Nikkei jumped over 3%.  Yen futures had not declined too much.  Thanks to ZH, I now know the answer.  I am tempted to sell Yen, but that is not a trade I had planned to make.

Mon, 08/30/2010 - 00:10 | 552289 septicshock
septicshock's picture

Obviously, the japanese citizen is not as moronic as the american citizen.  They don't like their money devalued to nothing.  They actually have a proper education system over there.  We on the other hand welcome money printing because of our collective stupidity.  They call it quantitative easing so the normal dumb person doesn't realize they are printing money.

Mon, 08/30/2010 - 10:05 | 552740 AbbeBrel
AbbeBrel's picture

The Japanese have been looking for higher yields for years - I was there a few years ago and a local pointed out the interest on a regular savings account and it was something like 0.05 percent.  Nope I am not making this up.

As a result the kimono-class have been shopping around for higher yields WW.   This works fine as long as the yen is weakening.  But when there are signs of strenthening - then back up the truck, dump the foreign stuff and bring it home, baby!   They don't want their silk singed, especially as they aren't getting much better deals overseas these days!!

Mon, 08/30/2010 - 00:37 | 552322 ZackLo
ZackLo's picture

japan doubling up before the flop?

Mon, 08/30/2010 - 01:06 | 552344 Itsalie
Itsalie's picture

well round one of rumor mongering over and ES was ramped up 1%, now the pavlovian HFT computer operators in HK and Singapore (there aren't any hedge fund managers left in Tokyo, their Wall Street bosses cannot afford the living allowance adjustment due to the expensive yen) are taking profit and enjoying their lunch with a quickie thrown in. Soon will be reloading for the next round of rumor mongering; it's the end of the month, instruction from wall street : got to get the red monthly candle to show green, only 2 days left.

Mon, 08/30/2010 - 01:25 | 552370 scratch_and_sniff
scratch_and_sniff's picture

Looks like they did a little case study on Swiss intervention...

Mon, 08/30/2010 - 01:42 | 552384 yabs
yabs's picture

so if the yen is going up how come the Nikkei is  also surging?

Mon, 08/30/2010 - 02:11 | 552399 Azwethinkweiz
Azwethinkweiz's picture

BoJ holds emergency meeting:

http://www.presstv.com/detail/140558.html

Mon, 08/30/2010 - 02:35 | 552408 MrTrader
MrTrader's picture

BOJ wants to learn it the hard way. No problem at all. What about a hammer to 70 USD/JPY ? Maybe this will spur the "learn effect" and the old boyz gentlemen´s club will finally act ?

Mon, 08/30/2010 - 03:02 | 552426 Miles Kendig
Miles Kendig's picture

Can't have the crutch get shortened now, can we?

Mon, 08/30/2010 - 03:07 | 552430 TraderTimm
TraderTimm's picture

You know what - I'd love to have a "Zerohedge PUT". Just pool capital, get some index PUT options bought, and GO WITH IT. Your contribution dictates the percentage you receieve, relative to the cost basis. Surround it with a big fat post and some publicity about how this is a reflection of 'x' number of investors who have had it up to HERE with the glad-handling FED policies and other tomfoolery.

Big 'ol website, showing where and when everyone decided to flip a big "F***K YOU" to the equity market.

I can dream, can't I...

 

Mon, 08/30/2010 - 07:10 | 552541 prophet
prophet's picture

Do people in China have access to ZH?

Mon, 08/30/2010 - 07:13 | 552544 Jimmy Bora
Jimmy Bora's picture

STEVE FORBES BELIEVES IN GOLDSTANDARD!!!

 

http://www.thedailybell.com/1328/Steve-Forbes-on-Overseas-Wars-the-Comin...

 

Daily Bell: You have studied economics for most of your life, it appears. Do you consider yourself of the Austrian school? Are you surprised by the progress the Austrian School has made in the 21st century?

Steve Forbes: The basic tenets of the Austrian School have withstood the test of time, and while I may have some variation of views on how you'd implement say, the gold standard, I think the basic tenets are absolutely there. Hayek, Mises and – though he's not considered a fully part of it – Schumpeter had insights on entrepreneurship. Liberty is good, government domination is NOT!

Daily Bell: You mentioned a gold standard. Should the Western world return to some sort of gold standard? What would it be? Is it feasible?

Steve Forbes: We will return to a gold-based monetary system. I don't think we'll go back to a 1920s or 20th century-style gold standard. But I think monetary policy will be tied to the price of gold, which manifestly it is not today. So, yes, a gold-based system is coming back, and it will be good!

Mon, 08/30/2010 - 07:51 | 552568 newstreet
newstreet's picture

Euro should have been in the 8 handle last night when the markets opened.  That was the tip-off that something was wrong.  Now it's down to 7 even, trying to hold.  I'll buy a few here.

Mon, 08/30/2010 - 08:00 | 552576 jbc77
jbc77's picture

Well it looks like the race to the currency bottom continues. Whats another $10 trillion Yen? I've got a great idea. Why doesn't Japan tweak their toliet paper a little bit? They should make Yen toilet paper, literally. Rolls of Yen toliet paper would be a fantastic move. You can wipe your ass with it and stimulate the Jap economy all in one shot.

On another note, why is it these central banks idea of easing is to gun their markets as helicopter Benny Boy is doing now? How does buying your own debt and letting the primary dealers gun the S&P helpful to an ecomomy? How does that create jobs? Does it not turn our markets into more of a casino based off hot money flows further destroying what ever natural price discovery is left?

 

Mon, 08/30/2010 - 08:24 | 552599 Gordon Freeman
Gordon Freeman's picture

Yes.

Mon, 08/30/2010 - 08:50 | 552623 bada boom
bada boom's picture

"How does buying your own debt and letting the primary dealers gun the S&P helpful to an ecomomy? How does that create jobs?"

Short term thinking I guess, but I do think artificially keeping markets afloat does help a little bit in spending.  You know, people get their monthly statement and see it's up.  So, they might feel a little better and spend. Or, they have been cashing out their equities at elevated prices. Some, might spend more. If anything they are buying time at a high cost.  Spending is what america is about, or should I say was about.

I do not agree with this action.

There is a darkside to this and its coming soon. Nothing is free.

Anyone have a cigarette to go with this blindfold.

Mon, 08/30/2010 - 12:22 | 553021 Rick64
Rick64's picture

Its about confidence, once that is gone there is no system.

Do NOT follow this link or you will be banned from the site!