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MNI INSIGHT: Govt Eyes Speeding Up Search For New BOJ Governor

(MNI) Tokyo

Victory in July's upper house elections could prompt early moves to select a candidate to become the new BOJ governor.

A strong performance for Japanese Prime Minister Fumio Kishida in upper house elections next month could prompt him to bring forward the selection process to replace Bank of Japan Governor Haruhiko Kuroda once his term expires next year, in a bid to send a signal to markets that the BOJ could adjust its extremely easy monetary policy to support the yen, MNI understands.

The yen slipped to 137 to the dollar in New York on Wednesday, its weakest since September 1998, continuing a rapid depreciation trend which the government frets is eroding corporate profits and pushing up prices of imported goods for households. But, while investors have speculated that the BOJ could adjust its yield curve control framework, by raising the upper limit of its target range from 0.25% for 10-year government bonds, so far Kuroda has held firm, for fear that tightening policy could undermine a still-weak economy. (See MNI INSIGHT: BOJ Eyes Autumn Move If Yen Steadies, Prices Rise)

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A strong performance for Japanese Prime Minister Fumio Kishida in upper house elections next month could prompt him to bring forward the selection process to replace Bank of Japan Governor Haruhiko Kuroda once his term expires next year, in a bid to send a signal to markets that the BOJ could adjust its extremely easy monetary policy to support the yen, MNI understands.

The yen slipped to 137 to the dollar in New York on Wednesday, its weakest since September 1998, continuing a rapid depreciation trend which the government frets is eroding corporate profits and pushing up prices of imported goods for households. But, while investors have speculated that the BOJ could adjust its yield curve control framework, by raising the upper limit of its target range from 0.25% for 10-year government bonds, so far Kuroda has held firm, for fear that tightening policy could undermine a still-weak economy. (See MNI INSIGHT: BOJ Eyes Autumn Move If Yen Steadies, Prices Rise)

Keep reading...Show less