Asia: Japan suffers from unchanged BoJ policy, stronger yen
Most Asian stocks were higher a day ahead of the ECB meeting, but Japan’s Nikkei decreased due to a stronger yen and falling inflation.
The yen gained against the dollar following the Bank of Japan’s (BoJ) decision to leave its monetary policy unchanged. The dollar was up 1% against the yen at ¥118.79., driving Nikkei 225 to drop by 0.49%.
The central bank decided to maintain its target for the annual expansion of the monetary base at ¥80tn during the first day of its policy meeting.
However, it revised its inflation forecast for 2015 to 1.0% from 1.7%.
Danske Bank analysts said: “The bottom line from today's meeting is that the BoJ is unlikely to ease on the back of the decline in headline inflation we are likely to see in the coming months.
“It can live with a temporary decline as long as the economy continues to recover and inflation expectations do not decline substantially.”
China’s Shanghai was up 4.7% for the second consecutive day, the highest rise since 2009. This follows Tuesday’s news that the gross domestic product grew of 7.3% year-on-year in the fourth quarter, beating expectations of 7.2%. However, this was the slowest economic growth in 24 years.
Hong Kong’s Hang Seng was up 1.68%, as anticipation grew of European easing. ECB President Mario Draghi on Thursday is expected to announce full-blown quantitative easing to address the weak economy and deflation.
Oil prices continued to fall after crude production in Iraq increased to record levels and the International Monetary Fund slashed global growth outlook. ICE Brent futures were down 0.8% to $48.46.