Kuroda corrodes the banksUNTIL this month bond traders were the most voluble complainers about the Bank of Japan’s vast programme of quantitative easing (creating money to buy bonds). The central bank’s interventions had slashed trading volumes in their market. But their gripes had a tiny audience and, understandably, received scant sympathy. Things have changed with the central bank’s new negative interest-rate policy (NIRP), which went into effect on February 16th. It has pummelled banks and spooked Mrs Watanabe, the archetypal Japanese saver. Fans of the new policy are hard to find.
For around two trading days after the BoJ announced on January 29th that some bank reserves would be charged -0.1%, financial markets responded as intended—the yen weakened and the Nikkei 225 share index rose. Then, with the European Central Bank hinting at an extension of its own negative-rate policy, investors sought safety in the yen, which rose sharply. In turn that dragged down the stockmarket, since Japan’s exporting giants may earn less if their competitive position is eroded.
Even after a rally on February 15th,...Continue reading
Source: Business and finance http://ift.tt/1SUsQ2j
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