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7 Mar 2013
Forex Flash: Central bank meetings leave pound most vulnerable - BTMU
Derek Halpenny, European head of Currency Strategy at the Bank of Tokyo Mitsubishi UFJ notes that today is the day of major central bank meetings and the BoJ meeting resulted in an unsurprising no change in monetary stance.
He writes, “It was the last meeting for Governor Shirakawa and with the new leadership set to take over on 19th March, there was never going to be any policy adjustment today. One policy board member – Sayuri Shirai – did vote to bring forward the open-ended form of asset purchases we can assume with the idea of initially being more aggressive but the proposal was defeated 8-1.” Further, he comments that still with three new members to the board and Shirai-san it is clear that it may only take persuading one further member to garner a majority for increased purchases. He notes that Shirakawa’s last press conference is ongoing with comments hinting at the need for caution in implementing policy ahead.
In other news from Japan halpenny comments that the weekly cross-border flow data again showed a substantial new selling of foreign bonds by Japanese investors totaling JPY 885.4bn, taking the four-week total to JPY 2,816bn. He writes, “There was also a substantial repatriation of equity investments totaling JPY 441.7bn, taking the four-week total to JPY 1,191.4bn. In the latest week there was also inflows from foreign investors totaling JPY 927.4bn. So the overall inflow last week was a huge JPY 2,254.5bn. These flows clearly aren’t impacting the yen and the foreign bond repatriation must be predominantly banks. There is some evidence of Toushin outflows picking up, but the outflows remain relatively modest.”
He writes, “It was the last meeting for Governor Shirakawa and with the new leadership set to take over on 19th March, there was never going to be any policy adjustment today. One policy board member – Sayuri Shirai – did vote to bring forward the open-ended form of asset purchases we can assume with the idea of initially being more aggressive but the proposal was defeated 8-1.” Further, he comments that still with three new members to the board and Shirai-san it is clear that it may only take persuading one further member to garner a majority for increased purchases. He notes that Shirakawa’s last press conference is ongoing with comments hinting at the need for caution in implementing policy ahead.
In other news from Japan halpenny comments that the weekly cross-border flow data again showed a substantial new selling of foreign bonds by Japanese investors totaling JPY 885.4bn, taking the four-week total to JPY 2,816bn. He writes, “There was also a substantial repatriation of equity investments totaling JPY 441.7bn, taking the four-week total to JPY 1,191.4bn. In the latest week there was also inflows from foreign investors totaling JPY 927.4bn. So the overall inflow last week was a huge JPY 2,254.5bn. These flows clearly aren’t impacting the yen and the foreign bond repatriation must be predominantly banks. There is some evidence of Toushin outflows picking up, but the outflows remain relatively modest.”