FOREX-Yen off 6-week low after “” helicopter cash”” mania shot down

A female counts Japanese 10,000 yen notes in Tokyo, in this February 28, 2013 picture illustration.

Reuters/Shohei Miyano/Illustration/File Photo

The yen hovered above six-week short on Friday after comments from Bank of Japan Governor Haruhiko Kuroda dented speculation Japan may be preparing an extreme “helicopter money” economic stimulus. The yen JPY= recuperated to 105.88 yen per dollar from 107.49, its six-week low against the United States currency touched on Thursday. The rebound was activated by Kuroda’s comments on a BBC Radio 4 interview on Thursday soft-pedaling the concept of helicopter money, basically a policy of injecting money straight to the economy in some form by printing cash. With Prime Minister Shinzo Abe crafting a huge spending bundle worth about $190 billion to strengthen the economy, some speculators had actually bet the BOJ could be financing the added spending – compared by economists to dropping big quantities of money from a helicopter. The BBC later on said its interview with Kuroda had actually been conducted in mid-June, assisting to cool the yen’s gains. But expectations that the BOJ will embrace reducing steps at its policy meeting on Friday next week stayed strong, whether those procedures fall into the category of “helicopter money” or not, thus limiting the yen’s gains. “Definitely his remarks have not resolved expectations of easing. I think a rough consensus in the market is increase in buying of ETFs and REITs along with 0.10 portion point cut in rate of interest,” stated Koichi Takamatsu, head of forex at Nomura Securities.

Few market gamers take Kuroda’s words at stated value after he introduced unfavorable rate of interest in January only days after he said openly that he was ruling out such steps. A little number of market gamers, however, believe the BOJ may choose to ease later on to keep its dwindling fire power. “I believe the BOJ is most likely to reduce in November when the federal government’s extra budget will be ready, rather than now. I’m not sure if the BOJ feels it has to act now, when even the Bank of England has not alleviated,” said Minori Uchida, primary currency expert at the Bank of Tokyo-Mitsubishi UFJ.

The dollar was steadier against other major currencies, with investors still aiming to find out how Britain’s decision to leave the European Union will affect the U.S. economy and the policy of the United States Federal Reserve. The dollar index stood at 96.917. DXY =USD, off Wednesday’s 4-month peak of 97.323. The euro was moving bit against the dollar after the ECB held back on any instant additional easing of financial policy on Thursday as anticipated. The euro traded at $1.1028 EUR=, slightly above this week’s low of $1.0980 however little bit changed from late U.S. levels on Thursday and is also almost flat on the week.

The British pound was also little changed at $1.3230 GBP= D4. The New Zealand dollar was on a slippery slope after it had actually fallen to six-week short on Thursday as New Zealand’s central bank said further rate cuts were most likely as it sets its sights on the high New Zealand dollar and perilously low inflation. That cemented expectations for reducing at its Aug. 11 conference. The kiwi stood at $0.6982 NZD= D4, having fallen to $0.6952 on Thursday. (Reporting by Hideyuki Sano; Editing by Eric Meijer and Kim Coghill).

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