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Yen Falls to Four-Year Low as G-20 Unopposed to BOJ Policies

The yen fell to a four-year low against the dollar and Japanese stock futures rose after the Bank of Japan (8301)’s stimulus policies were unopposed at a Group of 20 meeting.

The yen dropped to 99.78 per dollar, having briefly touched 99.98 per dollar, the weakest level since April 14, 2009. Futures contracts on the Nikkei 225 Stock Average (NKY) climbed 1.7 percent to 13,600 in Chicago. Standard & Poor’s 500 Index futures advanced 0.1 percent. Futures on Australia’s S&P/ASX 200 Index (AS51) gained 0.2 percent.

Meeting for the first time since the BOJ unleashed new measures aimed at delivering 2 percent inflation within two years, G-20 finance ministers reiterated a February vow to avoid “competitive devaluation,” while stopping short of singling Japan out for criticism. Bank of Japan Governor Haruhiko Kuroda emerged from the talks saying he was emboldened to press ahead with his campaign to defeat 15 years of deflation.

“The G-20 have decided not to view the aggressive stimulus in Japan as a problem,” said Stewart Richardson, who helps oversee $100 million as partner and chief investment officer at RMG Wealth Management LLP in London. “Traders will take this as a green light to sell the yen.”

In a nod to concerns that stimulus in one economy often creates challenges elsewhere and could fuel asset bubbles, the G-20 officials meeting in Washington heightened their commitment to being “mindful of unintended negative side-effects stemming from extended periods of monetary easing.”

Kuroda Confident

Kuroda told reporters after the meeting that “winning international understanding gives me more confidence to conduct monetary policy appropriately. We will continue our qualitative and quantitative easing for the next two years.”

China’s slower expansion in the first quarter is “normal” as the world’s second-largest economy sacrifices growth to make structural reforms, People’s Bank of China Governor Zhou Xiaochuan told Bloomberg News outside a meeting of the International Monetary Fund in Washington on April 20. While a “mild” slowdown in the global economy does have an impact on China, the 7.7 percent growth rate in gross domestic product is “overall normal” compared with the government’s 2013 target of 7.5 percent, Zhou said.

To contact the reporter on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net

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