Home Editor's Picks Japanese stocks tumble 3%, yen firms as end to ultra-dovish BOJ appears nigh

Japanese stocks tumble 3%, yen firms as end to ultra-dovish BOJ appears nigh


Japanese stocks tumble 3%, yen firms as end to ultra-dovish BOJ appears nigh By Investing.com

Breaking News


AuthorAmbar WarrickStock Markets

Published Mar 10, 2024 08:30PM ET

© Reuters.

Investing.com– Japanese stocks fell sharply on Monday, while the yen hovered near one-month highs as media reports suggested the Bank of Japan could end its yield curve control policies by as soon as next week.

The Nikkei 225 index slid nearly 3% by the afternoon session, while the yen firmed 0.2% against the dollar and remained close to a one-month high hit last week. 

The broader TOPIX stock index also lost as much as 3%.

A slew of media reports showed that the BOJ was close to ending its ultra-dovish negative interest rates and yield curve control policies, and could potentially do so at a meeting next week. 

Policymakers are considering the move- which will be the bank’s first rate hike since 2007- on expectations of steep increases in wages this year. 

An upward revision in gross domestic product (GDP) data on Monday- which showed the Japanese economy avoided a technical recession in the fourth quarter- also factored into fears of an early BOJ pivot.

Resilience in the Japanese economy gives the central bank more headroom to tighten policy. 

Reuters reported that the timing of a hike will be a close call between the March 18-19 meeting or the April 25-26 meeting, with policymakers closely watching annual wage negotiations between major firms and labor unions. 

“Today’s data certainly supports the BoJ’s view that the economy remains on a recovery path, but weak private consumption will be a concern for the BoJ as it mulls a change to its policy direction. We therefore see a higher chance of a policy change in April than this month,” analysts at ING wrote in a note.

Higher wages are likely to elicit more immediate action from the BOJ, given that they herald increased consumption and stickier inflation in the coming months- both of which are key factors for the BOJ in considering a policy pivot. 

Any policy tightening by the BOJ marks an end to nearly a decade of ultra-loose policy and stimulus measures enjoyed by Japanese businesses. A dovish BOJ was a key driver of the Nikkei’s stellar rally through 2023 and early-2024, which saw the stock index reach record-high territory above 40,000 points. 

A BOJ pivot offers more relief to the yen, which was walloped by a growing gulf between Japanese and U.S. rates over the past two years. The yen hovered around the 147 level to the dollar on Monday. 

Japanese stocks tumble 3%, yen firms as end to ultra-dovish BOJ appears nigh

Our Apps

Terms And Conditions
Privacy Policy
Risk Warning
Do not sell my personal information

© 2007-2024 Fusion Media Limited. All Rights Reserved.

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

Related News