SENSEX NIFTY
Jan 16, 2013, 05.18 PM IST | Source: CNBC-TV18

Market too optimistic on BoJ’s meeting: Rabobank

There is a Bank of Japan (BoJ) meeting on January 22nd. In an interview to CNBC-TV18, Adrian Foster, Financial Head-Research at Rabobank says, "a two percent inflation target will not have too much significance in the near term as they haven’t met the one percent target yet".

Adrian Foster

Head Financial Reasearch, Rabobank Group

Expertise : Equity - Fundamental

More about the Expert...

The yen had been falling over the past two months. The new Prime Minister has made some quite forthright comments. Expectations have been built up to board aggressive fiscal incentive, while pushing Bank of Japan to take bold monetary easing steps. As a result, there is a Bank of Japan (BoJ) meeting on January 22.

Also read: NAVs gain as markets end higher

Given political pressures, BoJ is widely expected to set an inflation target of 2 percent and ease the policy further. In an interview to CNBC-TV18, Adrian Foster, Financial Head-Research at Rabobank says, "a two percent inflation target will not have too much significance in the near term as they haven’t met the one percent target yet".

"They have been sitting on ultra easy policy for couple of years now. Perhaps the market is a too optimistic on options that could come out of BoJ meeting", he adds.

Below is the edited transcript of his interview to CNBC-TV18

Q: What is the sense you are making from the kind of fall we have seen in both the Shanghai and the Japanese markets? Are you getting a sense that these markets have gotten ahead of themselves?

A: Its worth just taking Japan in particular out of the regional trend if you like. Japan in particular was causing quite a strong rally in the equity markets in the recent months as indeed the Yen has weekend.

It hasn’t been translated directly into some of the other Asian markets. It’s been a bit of story on to itself. That’s the way to look at what we have seen in the last couple of sessions. We saw comments from the economy minister yesterday highlighting some costs to a week Yen to the broader economy. That’s seeing some of the speculative Dollar-Yen longs.

Stronger Yen has weighed on the Nikkei as you said it’s down over two percent today. It’s quite a sharp move, but I wouldn’t like to extrapolate that to the broader region. It’s very much a Japan picture or Japan story unfolding there.

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