The yen just exploded upwards after Bank of Japan chief Haruhiko Kuroda suggested that it’s ‘very weak’

Haruhiko Kuroda
Haruhiko Kuroda, Governor of the Bank of Japan gestures during a session at the annual meeting of the World Economic Forum (WEF) in Davos January 24, 2014. REUTERS/Denis Balibouse

Bank of Japan governor Haruhiko Kuroda just sent markets into a tailspin after dropping strong suggestions that the yen shouldn’t weaken much further against the dollar.

According to Reuters, Kuroda said that Japan’s real effective exchange rate is “very weak”, so further declines in the yen don’t seem likely.

And that was all anyone needed for the yen to start surging.

The Japanese currency initially rose by more than 1.4% against the dollar.

The US currency is currently down by more than 1.25% against the stronger yen, as you can see here:

Usdjpy

On a long-term chart, it’s clear to see that the yen is weak by the standards of recent years. In fact, just on Friday the currency notched up a 13-year low against the dollar.

The currency’s declining value is down in now small part to Kuroda’s own massive monetary stimulus, brought in as one of the first of the “three arrows” of Abenomics, Japan’s recovery strategy. Saying the yen is already weak enough is a strong hint against further easing.

Here’s how many yen a single dollar would get you over time — it’s clear that even with today, dip, the Japanese currency remains relatively weak:

Usdjpy

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