Doing Nothing Is Better for Japan

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By Emily Lai

Both Australia’s and Russia’s Central Banks have released comments on their monetary policies before the Fed meeting and the next in line is Japan, who will be having a 2 day policy meeting until Friday.

Mark Wan, Chief Analyst at Hang Seng Investment Services, tells BENCHMARK that he believes major central banks in Asia will not be making any moves in the near term. “Japan does not need to change its policy at this meeting as they want the yen to stay at this level,” he says. He thinks that BOJ’s Governor Haruhiko Kuroda’s comment on the yen’s relative value against other currencies being unlikely to weaken further, is a signal for not wanting the yen to fall to less than 125 against the US dollar.   

Wan also believes that Australia is going to stop lowering rates. He focuses his belief on quotes from a speech by Governor Glenn Stevens, warning on the result of a rising debt level if rates go down. In contrast, the Reserve Bank of Australia’s minutes state that there is a need for the AUD to depreciate further for the support of more balanced economic growth.

Wan believes the market has priced-in the Fed rate hike in September and capital flow should not be affected too much. However, he believes major Asian currencies in the second half of the year will be dragged down by two leaders – the yen and RMB. BM