Stocks in Asia made a strong leap on Monday, led by Japanese markets buoyed by stimulus measures announced by the country’s central bank.
The Bank of Japan expanded monetary stimulus on Monday and said it would buy an unlimited amount of bonds to keep interest rates low, in a bid to combat the economic impact on the coronavirus on the Japanese economy.
“The spread of the coronavirus at home and abroad is inflicting a severe impact on Japan’s economy. The economy will remain in a severe state for the time being,” Bank of Japan Governor Haruhiko Kuroda said after Monday’s board meeting.
“Achievement of our price target … will take time. But there’s no change to the fact we will strive to achieve our 2% price target.”
“It’s important to maintain an accommodative monetary policy stance now, so that in the long run Japan’s economy can head toward our price target,” the BOJ governor said.
“By removing the bond-buying guidance, we clarified our intention to buy government bonds aggressively without setting a limit.”
“As in other countries, Japan has taken massive fiscal stimulus measures. The BOJ is also undertaking powerful monetary easing … We will buy as many government bonds as necessary under YCC (yield curve control). We’re buying government bonds as part of our monetary policy steps. But our measures and fiscal stimulus will also have a mutually reinforcing impact,” Kuroda explained.
“We aren’t monetising government debt. Our stronger commitment on bond buying is aimed at maintaining liquidity in the bond market, and to keep the yield curve stably low to achieve our interest rate targets. It’s a monetary policy step based on YCC. But we also hope it will heighten the effect of a policy mix between fiscal and monetary measures.”
The actions by the bank were taken to heart by investors and traders. The Nikkei 225 jumped 521.22 points or 2.71% to 19,783.22.
The positive actions taken, and its effect on Japanese markets lifted other stock exchanges in the region.
The Australian All Ordinaries appreciated 87.60 points or 1.60% to 5,388.30.
China’s Shanghai Composite rose 6.97 points or 0.25% to 2,815.49.
Hong Kong markets were still trading at the time of writing. Late in the session the benchmark Hang Seng was ahead more than 400 points.
The U.S. dollar was appreciably lower on Monday. The euro firmed to 1.0838. The British pound was sharply higher at 1.2422. The Japanese yen strengthened to 107.26. The Swiss franc rose to 0.9733.
The Canadian dollar was stronger at 1.4059. The Australian dollar made solid gains to 0.6452, whiule the New Zealand dollar was also in demand, last trading in on Monday towards the close at 0.6058.
Source: Central Asia News
