An emergency Bank of Japan meeting seems to have failed to immediately curb the yen’s recent economically dangerous surge against other currencies.
While the BOJ added another 10 trillion yen ($117 billion) to its bank lending program, the news came as a disappointment to traders who were hoping for more substantive intervention.
With the yen at a 15-year high against the dollar, local manufacturers and other export-oriented companies are suffering. A strong yen limits Japanese competitive options against Korean and Chinese rivals in particular.
Although the yen weakened ahead of the BOJ meeting, it quickly retraced most of its losses afterward.
The last time Japan sold yen to weaken its currency was in early 2004, when it dumped roughly 14.8 trillion yen ($173 billion) in three months.
Analysts say that with local interest rates still at 0.10%, the BOJ needs to come up with a “surprise” — perhaps an unexpected bond purchase or other quantitative action — to drive speculators out of the yen.
In the meantime, FXY (quote) should remain strong, as should Korean and Chinese exporters.
One obvious name to look into: Posco (PKX, quote), which directly competes with Japanese steel mills.