From Asia Times via MENAFN, September 22:
Though governor Kazuo Ueda announced the news last Friday, the Bank of Japan's decision to leave interest rates unchanged was really made in Washington.
Two days earlier, US Federal Reserve chairman Jerome Powell disappointed many by suggesting the harshest US tightening cycle in 30 years isn't over. That news, in many ways, left Ueda's team at the BOJ with nowhere to go – and standing pat today.
Virtually everyone agrees the BOJ must begin normalizing interest rates as soon as possible. The 23 years of quantitative easing (QE) have warped credit markets and deadened the“animal spirits” needed to reinvigorate Japanese innovation and competitiveness.
But it's hard to imagine that process beginning with the threat of more Fed rate increases hovering over Japan Inc. And while neither Ueda nor Prime Minister Fumio Kishida is saying so publicly, both are happy to see the yen weaken further.
The yen's 12.9% drop this year puts it on the cusp of 150 to the US dollar. A weaker exchange rate makes exports cheaper and helps Tokyo offset headwinds from US trade sanctions. Though aimed at China, President Joe Biden's tech policies are causing considerable pain for Japan and South Korea, too....
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With the Yen at 149.034 we are watching for signs the powers-that-be in Tokyo are defending the currency from getting weaker but so far, nothing.
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