One of the key changes to BOJ policy today was exemption to negative rates for Money Reserve Funds
We may get more detail in the presser at 06.30 GMT but the change should come as no big surprise to ForexLive readers seeing as I had the story last Sunday here.
I was merely the news carrier though. Reuters had the scoop from their sources:
"The Bank of Japan's policy board is set to discuss this week whether to exempt $90 billion in short-term funds from its newly imposed negative interest rate, after the securities industry warned that investment money would be driven into bank deposits.
Some in the BOJ are sympathetic to the request, which came from the Investment Trusts Association, the sources said, because a flow from investment to bank accounts would go against a push by PM Abe and the central bank to move more of Japan's immense savings out of deposits and government bonds and into more productive investments, to kick-start growth and defeat stubborn deflation.
But other central bankers worry that granting an exemption from negative rates for "money reserve funds" (MRFs) - a low-risk product brokerages offer investors to temporarily park their cash - could create a troublesome precedent as the financial industry seeks to shield other investments from negative rates, the people say.
"MRFs play an important role in fund settlement," said one of the sources. Another said: "I think it's only natural (for the BOJ board) to debate it (at the policy meeting on Monday and Tuesday)."But another of the sources said: "This is a touchy issue ... It raises the question of whether (allowing an exemption) could lead to similar requests by banks."
Let' s see if Mr K adds any colour at the presser. USDJPY meanwhile 113.46 after failing again above 114.00. Year-end yen demand prevailing again as I've pointed out many times recently.
