The yen rose and Japanese government bond futures fell after the Nikkei reported that Kazuo Ueda was to be nominated as the Bank of Japan’s next governor.
(Bloomberg) — The yen rose and Japanese government bond futures fell after the Nikkei reported that Kazuo Ueda was to be nominated as the Bank of Japan’s next governor.
The Japanese currency climbed as much as 0.8% against the dollar. Ueda is an economist and a former member of the BOJ policy board. He is a major surprise and was not a favorite for the nomination.
Investors have been weighing the perceived policy bias of the various candidates to replace Governor Haruhiko Kuroda to gauge how quickly the BOJ will move away from its stimulus measures, if at all. Speculation ramped up that a shift is in the offing after tweaks to yield-curve control in December, with commentators saying new leadership would be an ideal catalyst for a policy change.
Earlier this month, the Nikkei reported that the Japanese government approached BOJ Deputy Governor Masayoshi Amamiya for the role, a longtime heavyweight at the central bank and seen by market players as the closest to a continuity candidate among the likely replacements. Japanese officials refuted the report.
Japan watchers are aware that initial local press reports on central bank personnel changes should be treated cautiously, as in the past the government went with other candidates in the face of intense criticism after names were leaked to the media before an official nomination.
BOJ Veterans Remain Best Picks for Post-Kuroda as Decision Looms
The BOJ’s surprise December decision to double its ceiling for 10-year yields illustrated the shockwaves that any hint of policy change can trigger, both at home and abroad. The move sent the yen and Japanese yields soaring, Treasuries lower and touched everything from US equity futures to the Australian dollar and gold.
The risk comes from any policy shift that triggers a wave of Japanese money flowing back home out of foreign holdings like Treasuries. That could turbocharge a yen rebound, spark a selloff in global bond markets and weigh on stocks both locally and abroad.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.