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?

About the Author

Ivan Guan is the author of the popular book "FIRE Your Retirement". He is an independent financial adviser with more than a decade of knowledge and experience in providing financial advisory services to both individuals and businesses. He specializes in investment planning and portfolio management for early retirement. His blog provides practical financial tips, strategies and resources to help people achieve financial freedom. Follow his Telegram Channel to join the FIRE community.
The views and opinions expressed in this article are those of the author. This does not reflect the official position of any agency, organization, employer or company. Refer to full disclaimers here.

{"email":"Email address invalid","url":"Website address invalid","required":"Required field missing"}