The euro strengthened to 131.51 yen from 131.19 yen in U.S. trade, while it also advanced to US$1.0844 (S$1.54) from US$1.0831.
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– Existing balances will continue to have a rate of 0.1 percent. “Whilst the headline figure is negative the Bank of Japan has introduced a tiered system and the negative interest will only apply to new balances”. The Chinese yuan is trading flat at 6.5761 Mo Moreover, markets are still discounting the US Federal Reserve’s decision to keep the interest rates unchanged and acknowledgement the risks such as plunging oil prices and jitters about Chinese growth.
WALL STREET: U.S. stocks closed higher on Thursday on hopes for an oil production cut and gains in tech stocks.
The MSCI world equity index, which tracks shares in 45 countries, rose half a percent. US Treasury yields fell to four-month lows.
“It has become clear that stock markets can not stand on their own feet”, said KBC senior economist Koen De Leus, in Brussels. It hopes that will encourage commercial banks to lend more, rather than keeping cash at the central bank, and stimulate investment and growth.
The yen plunged more than 1 per cent against the euro after the rate on excess reserves held by financial institutions at the BOJ was cut to minus 0.1 per cent. Two-year Japanese government bond yields sank to minus 0.085 per cent.
Germany’s 10-year Bund yield DE10YT=TWEB fell 6.5 basis points to 0.26 percent, its lowest level since late April 2015.
The dollar index, tracking the dollar against a basket of major currencies, rose 1.05 percent to 99.549. PetroChina slumped 2.8 percent after saying annual net income may have fallen as much as 70 percent. That put oil on track for a second weekly gain, though volatility has climbed to its highest since 2009 as traders try to price in the uncertainty around supply cuts.
Japan’s headline Nikkei 225 stock index was having a losing session before the news, but ended the day up by a hefty 2.80% as equities traders warmed to the idea of even “easier” money.
“What’s important is to show people that the BOJ is strongly committed to achieving 2 per cent inflation and that it will do whatever it takes to achieve it”, the central bank’s governor Haruhiko Kuroda said a news conference after the decision. “We had an outsized move because it was a little bit of a surprise with Japanese rates pulling into negative territory and capital drove into the USA markets and into the dollar”.
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However, the Indonesian rupiah surged 1.15 per cent on speculation that the BoJ move and more possible easing by the European Central Bank will push investors into higher-yielding, riskier assets.
