Japan’s central bank made the incredible announcement last week that it would buy stocks, bonds, and real estate in a bid to devalue the yen.
They’ve already set up a $61.1 billion fund targeting bonds, exchange-traded funds (ETFs), and real estate investment trusts (REITs) and it’s a bid to fight deflation by blatantly inflating all kinds of asset prices.
As Joe Weisenthal has pointed out, this is part of Japan’s new ‘rabid dog‘ monetary policy — They want speculators to be absolutely terrified by the unpredictable nature of the central bank. It could suddenly intervene in currency markets, suddenly start buying Nikkei ETFs, or just throw free money at banks and order them to lend. They’re craaazy, so beware if you’re long the yen.
Yet even Japan’s wild actions to discredit its own currency hasn’t stopped the yen from appreciating further. It’s now below 82 per U.S. dollar and near year-to-date lows (ie. the strongest all year).
Maybe that’s why Bank of Japan governor Masaaki Shirakawa has today ‘hinted’ that the central bank could expand its $61.1 billion inflate-the-market-at-all costs buying program even further.
“If judged necessary in the future, steering monetary policy by making further use of the fund is one of the likely policy options,” he said at a parliamentary committee meeting reports the Wall Street Journal.
Translation — We can and will trash our currency to the best of our ability. Anything for the exporters.