While the whole world is worrying about inflation, the new governor of the Bank of Japan (BOJ), Haruhiko Kuroda, who came on board in March expressed his ambition on Thursday to “do whatever it takes” to push up inflation to the BOJ’s target of 2% within two years by buying a larger and wider range of assets.
The last time we heard of “to do whatever it takes” was in July last year, when Mario Draghi, President of the European Central Bank, has pledged to do “whatever it takes” to protect the eurozone from collapse.
The Bank of Japan unleashed the world’s most intense burst of monetary stimulus on Thursday, promising to inject about $1.4 trillion into the economy in less than two years, a radical gamble that sent the yen reeling and bond yields to record lows.
Look at the chart below, Japanese Yen depreciates 4% in a day
Look at how Nikkei 225 roaring from 12,000 to 13,000
The last time I blogged about Japan was in 2011 when “Japan Intervenes on Yen, Again!“. On the day, the intervention has pushed the greenback up as much as 5% against Yen.
The BOJ is buying assets at 75% of the Fed’s level, but the Japanese economy is only one-third the size of the US.
As we all know by now, Japan was not able to successfully revive his economy for nearly two decades, but he never failed to attract the world’s attention by such big bang from time to time.
The famous hedge fund manager Kyle Bass said Japan is trying to materially devalue its currency while holding rates flat. The “economists and central bankers believe they can live in that nirvana,” but he believes they will lose control.
For now, Kyle Bass has been targeting Japan by shorting JGBs, buying CDS on JGBs, shorting the Yen. What would you do?
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