Showing posts with label BoJ. Show all posts
Showing posts with label BoJ. Show all posts

Friday, March 18, 2016

Why Ginza’s bullion traders love BoJ these days

Just happens to be a coincidence that the Oilholic is in Tokyo to witness the conclusion of the Bank of Japan’s two-day monetary policy meeting. There were no major surprises, as Governor Haruhiko Kuroda and his board left the country’s benchmark interest rate unchanged at -0.1% in line with market expectations.

The BoJ remains well below its 2% inflation target, headline economic growth is stagnant, exports are flat and well the Oilholic can personally testify that the yen, a preferred carry trade currency, is soaring making life for overseas visitors all that pricier! The pound sterling was lurking around JPY150 level, while the dollar fell below JPY113.50 following the BoJ’s decision which greeted the market on Tuesday.

Most analysts here think further economic stimulus both from the BoJ as well as the Shinzo Abe administration is all but inevitable, with Governor Kuroda noting: “Japan’s economy has continued its moderate recovery trend.”

Moderate, quite simply might not be enough for most Japanese people, hence the weighting in favour of stimulus is rising. However, not everyone is unhappy about the central bank’s policy stance – gold bullion traders are among those with beaming smiles.

According to Tanaka Kikinzoku Kogyo (KK) store in Tokyo’s Ginza district, cited by Bloomberg, the price of gold bars rose to JPY5027 (£31.14, $44.30) per gram on March 11; that’s the highest since July last year.

“Many customers are wagering that it is better to turn their savings to gold as a safe asset rather than deposit money at banks that offer low interest rates,” a spokesperson for the store told the newswire.

The said interest was going strong even at prices exceeding and staying steady above JPY5000 per gram as the Oilholic prepared to leave Tokyo on Friday with cherry blossoms (or “sakura”) having bloomed a few weeks early on the sidewalks and parks not far from the City's historic bullion district and destination for upmarket shopping.

That’s all from Japan folks as the far eastern adventure comes to an end, and a North American one is about to begin. Next stop Vancouver, British Columbia, Canada! Keep reading, keep it ‘crude’!

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© Gaurav Sharma 2016. Photo: Bank of Japan, Tokyo © Gaurav Sharma, March 2016.