
Yen Rises as Bank of Japan Chief Rules Out 'Helicopter Money' in June Comments
The yen jumped abruptly back from seven-week lows against the dollar on Thursday after Bank of Japan Governor Haruhiko Kuroda poured scorn on the idea of so-called helicopter money in a pre-recorded BBC interview.
Kuroda featured in a Radio Four documentary stating that there was "no need and no possibility" of pumping a one-off cash infusion into the economy to spur growth and to lay to rest a prolonged period of falling, or only slightly rising, prices in Japan. The interview was recorded in June and was part of a program by Financial Times columnist Martin Wolf examining central bank strategies in an environment of monetary laxity.
Helicopter money, a term coined by economist Milton Friedman in 1969, would entail a direct and one-off capital infusion through, for example, transfers into consumers' bank accounts or tax breaks. The move would, in theory, trigger spending more effectively than quantitative easing measures like the purchase of bonds held by banks.
Kuroda tempered his comments by saying, however, that there is no "significant limitation of further easing monetary conditions in Japan if necessary." His comments were broadcast before the bank meets on July 29 to set rates.
The dollar was recently down 0.50% against the yen at ¥106.33, having traded 0.29% higher in the Asian business day. The euro was also down 0.50% against the Japanese currency at ¥117.140,
The comments could push Japanese stock indices down from seven-week highs on Friday . Excitement about both Bank of Japan action and an eagerly anticipated program of government stimuli has propelled shares in recent weeks, making Japanese equities among the clear winners of the post-Brexit-vote environment.
The yield on the Japanese benchmark 10-year bond was recently up one basis point at minus 0.23%.
A higher yen is unhelpful for exporters but makes overseas acquisitions cheaper. Before the broadcast of Kuroda's comments, machinery maker Komatsu had today said it would spend $3.7 billion including debt on Joy Global, (JOY) of Milwaukee.









