Bank of Japan has come to terms with the growing exchange rate of the local currency. A short time ago, the government was doing their best to curb the yen appreciation and then make attempts to bring it down. However, all efforts were in vain. At present, both market participants and investors detect a softening in Bank of Japan Governor Haruhiko Kuroda’s stance toward the stronger yen. While the currency has risen 3.9% this year to 101.36 per the U.S. dollar, the central-bank chief signaled this week he’s satisfied with the current exchange rate. Kuroda told reporters in Tokyo the yen is no longer excessively strong and that the BOJ is on its way to meeting its inflation target. However, it should be noted that some experts do not share tranquility of Japanese officials. “He seems to be just ready to sit, wait, and watch,” Sean Callow, a Sydney-based strategist at Westpac Banking Corp. stated. The analyst thinks that decisive action is essential in this situation. As for other points in the BoJ’s forward guidance, the recent policy meeting confirmed its plan to increase the monetary base by 60 trillion yen to 70 trillion yen ($590-690 billion) per year. The officials also noted there are no weighty reasons to expand the ongoing QE program. So, the inflation is likely to increase its pace in the near future. According to the estimates of the BoJ’s executive board, the inflation is expected to hit 1.9% in the fiscal year starting in April 2015 whereas the consumer inflation is projected to rise to 2.1% in the 2016 fiscal year. Analysts believe the Bank of Japan will not expand unprecedented bond purchases as Governor Kuroda is quite certain of achieving the target inflation level.
