Kiwi up against yen after new BOJ governor brings out big guns

The New Zealand dollar is heading for a 3.3 percent weekly gain against the yen after new Bank of Japan governor Haruhiko Kuroda unveiled plans to double the bank's balance sheet in unprecedented quantitative and qualitative easing in a bid to reignite the world's third biggest economy.

The kiwi rose as high as 81.59 yen, a four-year high, and traded at 81.40 yen at 5pm in Wellington from 78.06 yen yesterday. It fell to 84 US cents from 84.16 cents at 8am and 84.08 cents yesterday.

Mr Kuroda wants to buy 7 trillion yen ($US73 billion) of bonds a month from a wider group of assets to double the monetary base by the end of next year in a bid to lift inflation to an annual pace of 2 percent and help revive the ailing nation's economy after two decades of stagnation.

That has seen the yen weaken to near a four-year low at 96.68 per US dollar.

"Most currencies are suffering against the US dollar as everyone tries to buy dollars against the yen," says Mike Jones, currency strategist at Bank of New Zealand in Wellington. "We're in uncharted territory and no-one's really sure" where things will go from here.

He says the kiwi may climb as high as 85 yen as investors continue to look for better returns outside Japan.

Investors are awaiting US employment figures in Washington, early Saturday New Zealand time, which may be weaker than expected after private payrolls data missed estimates.

The local currency is heading for a 0.3 percent weekly gain against the greenback and a 0.6 percent increase on a trade-weighted basis. The kiwi hit a new post-float high on the TWI at 77.54, and was at 77.39 at 5pm in Wellington from 76.95.

The European Central Bank and Bank of England also review monetary policy yesterday, with the ECB noting a slowing down of the region's economy and hinting at the possibility of a rate cut and the use of non-standard measures to stimulate growth.

The kiwi fell to 64.96 euro cents from 65.43 cents yesterday and declined to 55.16 British pence from 55.56 pence. It gained to 80.70 Australian cents from 80.27 cents yesterday.

(BusinessDesk)