Yen Drops Versus Peers as Tankan Fuels Easing Speculation

Lower rates!
More QE!

Be patient, monetary policy works with a lag
It’s only been 20 years
Hyper inflation is just around the corner…

Yen Drops Versus Peers as Tankan Fuels Easing Speculation

April 2 (Bloomberg) — The yen weakened versus all of its major peers after a Bank of Japan (8301) report showed that sentiment failed to improve at the nation’s largest companies, stoking prospects the central bank will boost monetary stimulus.

The Japanese currency slid against the dollar and euro as signs that manufacturing is improving in the U.S. and China, the world’s two biggest economies, undermined demand for haven assets. The euro remained higher after a quarterly gain versus the greenback as European governments called for a bigger global financial emergency fund after engineering a firewall to fight the region’s debt crisis.

“The worse-than-expected Tankan survey seems to be fueling talk that the BOJ will ease policy further,” Lee Wai Tuck, a currency strategist at Forecast Pte in Singapore, said about the central bank’s quarterly sentiment survey. “This is probably leading to selling of the yen.”

The yen lost 0.4 percent to 83.18 per dollar as as of 10:19 a.m. in Tokyo. It slid 0.4 percent to 110.97 per euro. Europe’s 17-nation currency was little changed at $1.3341 after rising 3 percent versus the greenback in the three months ended March 31.

The Tankan index for Japan’s largest manufacturers was unchanged last quarter from minus 4 in December, the BOJ said today in Tokyo. That was less than the median estimate of minus 1 in a Bloomberg News survey of economists. A negative number means pessimists outnumber optimists.

BOJ Meetings

BOJ policy board members are scheduled to meet April 9-10 and April 27 this month. The central bank held off from expanding asset purchases at its meeting in March as it monitored improvements in the economy. In February, it expanded bond purchases by 10 trillion yen ($120 billion) and set a 1 percent inflation goal in February.

The Institute for Supply Management’s factory index for the U.S. probably rose to 53 last month from 52.4 in February, according to the median estimate of economists surveyed by Bloomberg before the figures are released today.

An index of Chinese manufacturing climbed to 53.1 last month, the highest since March 2011, the logistics federation and the National Bureau of Statistics said yesterday. The measure has a pattern of rising each March.