Yen dives on report that BoJ looking at financial firms support

BoJ shocked markets after it adopted the negative rate policy, effectively charging banks to store excess reserves

Afp April 22, 2016

TOKYO: The yen sank Friday on a report that Japan's central bank may take steps to support major financial institutions hit by its shock negative-rate policy.

The Bank of Japan was looking at offering negative rates on some loans, Bloomberg News said, citing anonymous sources.

"This would mean banks can receive money for borrowing from the Bank of Japan," said Masahiro Ichikawa, a senior strategist at Sumitomo Mitsui Asset Management.

"It's a plus for bank profitability as it eases the burden from the BoJ's negative interest rates."

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The BoJ shocked markets in January after it adopted the negative rate policy, effectively charging banks to store excess reserves in its vaults.

The move was aimed at spurring lending and achieving its two percent inflation target as the government struggles to kickstart the world's number-three economy.

The dollar jumped to 110.27 yen after the report, well up from the 109.40 yen earlier in Tokyo and the 109.50 yen seen late in New York. And the euro rose to 124.61 yen from 123.60 yen in US trade.

Friday's gains in the dollar come after a run of losses -- it fell this week below 108 yen from around 112 yen at the start of the month -- fuelled by concerns about the global economy. However, a string of positive Chinese data and a rally in oil prices have lent the greenback some support this week.

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The BoJ and US Federal Reserve are due to hold their latest policy meetings next week, which investors will be closely monitoring for an idea about their plans for monetary policy.

The euro edged up to $1.1297 from $1.1288 after the European Central Bank held steady on fresh policy moves Thursday.

The ECB's boss Mario Draghi sought to reassure markets over the eurozone economy by saying it would unleash further stimulus "if warranted" to kick-start growth and inflation.


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