Markets were surprised in Tokyo trading by news that Amamiya turned down the post of BOJ governor and that 71-year-old Kazuo Ueda was set to get the job. Ueda wasn’t even on the long list of names being speculated about, he wasn’t even a dark horse. The immediate reaction was sharp and USD/JPY weakened. After that, the market seems to have come to the conclusion that it really doesn’t know much about Ueda. That sentiment was reinforced when he said today that the BOJ’s policy is appropriate and that easy policy should continue. Justin wrote a great post earlier on what he said earlier. There’s also this: „Going forward, as economic activity recovers post-Covid, a weaker yen is expected to add to the demand-boosting effect. Globally, however, inflation and economic growth will slow. We’ll have to see. Sustainable. 2% inflation from Japan is still a long way off.” At some point, the BOJ will have to leave the YCC, but the appointment of Ueda as BOJ governor is not a clear sign of that. As a result, USD/JPY reversed today.
