Yen Climbs as BOJ Pause Report Bucks Global-Stimulus Pattern

The yen climbed the most in eight weeks after reports Bank of Japan policy makers deem further easing counterproductive.

As central banks around the globe seek to bolster sluggish economies through stimulus and lower interest rates, investors are turning more bullish on nations that have monetary policy on hold or may tighten. Sweden’s central bank became the latest to ease, sending the krona to its weakest level since April 2009.

“The main focal point for currency investors is the outlook for monetary policy on a global scale, and there’s been a lot of surprises,” said Joe Manimbo, a market analyst in Washington at Western Union Business Solutions, a unit of Western Union Co. For the yen, “perhaps it’s not so much the level per se, but the speed and the volatility that we’ve seen that can be disconcerting for a policy maker.”

The yen appreciated 1.5 percent to 118.70 per dollar as of 12:06 p.m. New York time, after climbing the most since Dec. 16. Japan’s currency rose 0.8 percent to 135.46 to the euro.

The Swedish krona dropped 0.5 percent to 8.4159 per dollar and 1.2 percent to 9.5993 per euro.

Shifting View

The yen climbed versus all except one of its 16 major peers after the remarks, which indicate a possible shift in thinking on the exchange rate among some BOJ officials. Policy makers are concerned loose monetary policy will trigger declines in the currency that damage confidence, according to people familiar with the situation.

“One of the biggest reasons behind the depreciation of the yen has been policy,” Sireen Harajli, a Mizuho Bank Ltd. strategist in New York, said by phone. “Any indication that this might be reversed or changed obviously is going to see a lot of reversal in those moves.”

Japan is looking to spur exports and inflation, both of which benefit from a weaker exchange rate.

Waning forecasts for price growth encouraged Sweden to ease policy. The nation’s Riksbank lowered its repo rate to minus 0.10 percent from zero and said policy will “soon” be made “more expansionary” by buying 10 billion kronor ($1.2 billion) in sovereign debt with maturities of one to five years in a program known as quantitative easing.

“Negative rates give additional reason not to hold SEK,” said John Hardy, Hellerup, Denmark-based head of foreign-exchange strategy at Saxo Bank A/S, the second most-accurate forecaster of the euro-krona exchange rate last year. “Doing a smidgen of QE suggests they have broken the taboo and can crank it up if conditions warrant. They wanted the SEK weaker, they are getting it.”

Sweden’s krona was the second-worst performer of the day versus dollar’s and the euro’s 16 major peers.

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