GO
Loading...

Weak US Jobs Report Could Force BOJ to Act: Economist

Kurien Abraham|Senior Producer, CNBC Asia Pacific
Thursday, 19 Apr 2012 | 2:15 AM ET

The Bank of Japan must act to head off further strengthening in the currency, an economist told CNBC on Monday, after the yen rose to a one-month high versus the dollar on the weaker than expected U.S. jobs report.

Yen coins and banknotes
Image Source | Getty Images
Yen coins and banknotes

"With the Yen appreciating from 85 to 81, what the BoJ did in February is losing effect," Takuji Okubo, the Chief Japan Economist at Societe Generale Corporate & Investment banking said on Monday, referring to the central bank's expansion of asset purchases and its establishment of an inflation target of 1 percent earlier this year.

The BoJ's actions in February helped to weaken the yen to 83.71 versus the dollar by mid-March. But in recent weeks the currency has once again been strengthening as investors have become more wary about risk. A stronger yen hurts Japan's export-dependent economy.

On Monday, the greenback hit a one-month low against the yen, after the U.S. economy added fewer jobs than expected last month. The figures supported views that the Federal Reserve will ease policy further to support the economy. The Yen's attraction as a safe haven has also been boosted by tensions over a North Korean rocket launch.

According to Okubo, the central bank could signal its resolve to print more money by changing its inflation target at its two-day meeting, which is currently under way.

"We think the BoJ could potentially raise its inflation target from 1 percent to 2 percent. With this the BoJ could show more explicitly that (it) is trying hard to fight deflation ," Okubo said.

In the meantime as the yen continues to strengthen, one analyst says it could create a buying opportunity.

"If the U.S. Fed does not do a QE 3, U.S. rates will start going up again, and as such dollar-yen will be a buy," Harry Ida, senior analyst at Thomson Reuters told CNBC on Monday. "I think 80 or below 80 will be a very good buy for Dollar-Yen."

Featured

  • Pump jacks and wells are seen in an oil field on the Monterey Shale formation where gas and oil extraction using hydraulic fracturing, or fracking, is on the verge of a boom, March 23, 2014 near McKittrick, California.

    Brent crude futures turned lower after Russia said top diplomats have agreed to take immediate steps toward calming tensions in Ukraine.

  • An employee wipes a TV screen in a shop in Moscow, on April 17, 2014, during the broadcast of President Vladimir Putin's televised question and answer session with the nation.

    Russian President Vladimir Putin warned of possible disruption to Europe's gas supply on Thursday, as the U.S. confirmed it would send additional military support to Ukraine.

  • A former BP employee will pay to settle allegations of insider-trading during the 2010 Deepwater Horizon oil spill.

  • Pro-Russian activists seized the main administration building in the eastern Ukrainian city of Donetsk.

    Deadly clashes in eastern Ukraine have spiked fears of all-out war in the region. So who are the armed, flag-waving rebels who appear to be behind it all?

Contact Energy

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    › Learn More