The central banking holy grail of interest rates and the “soaring” Yen

Any level below ¥117 and Japan’s corporations begin risking export reduction and that seems to be the threshold on the Yen. Within one day of trading, the Nikkei dropped 3.6 percent yesterday and the Yen “soared” to ¥107 from ¥111 from just two days ago. The Yen’s movement can be tracked real time here: DAILYFX. To understand the central banking holy grail critical theory on interest rates, which is bullshit, and anyone who views this documentary I posted yesterday on Japan’s central bank will see this, be sure to view this documentary based on Richard Werner’s book Princes of the Yen. The only aspect about the documentary though that wasn’t presented, is the fact that Japan’s central bankers answer to the World Bank, the BIS and the European Central Bank (ECB).

Source: BBC

Nikkei falls and yen surges as Japan holds interest rates

28 April 2016

Japanese shares fell and the yen surged after the Bank of Japan decided against any extra monetary easing.

The Bank of Japan kept interest rates unchanged despite coming under pressure to take further action.

It had introduced negative rates in January but this failed to provide a much needed boost for the economy.

The Nikkei 225 finished 3.6% lower at 16,666.05. New economic data also showed a slip back into deflation while industrial production expanded.

Japan has for years been trying to boost its economy and end a period of stifling deflation.

One way to try to achieve this is by monetary policy, which is one of Prime Minister Shinzo Abe’s three key “Abenomics” policies to turn around the economy.

But even negative rates – meaning commercial banks will be charged if they deposit money with the central bank – have not trickled down to get banks to lend more and companies and people to invest or spend more.

The Bank of Japan’s decision to hold rates also sent the yen currency soaring, which is likely to have a negative affect on the crucial export sector.

The yen rose nearly 2% against the dollar, with one dollar worth 109.33 yen.

“This shows that too much expectation of further easing had been priced in and the BOJ has surprised the market by taking no action,” said market analyst Margaret Yang of CMC Markets.

“It is probable that the central bank is temporarily running out of tools to stimulate the economy, or they need more time to observe and assess the impact of negative interest rates.”