The yen showed significant strengthening in the European session following reports that Kazuo Ueda will be appointed as the next governor of the Bank of Japan (BOJ).
He is said to be replacing Haruhiko Kuroda who will end his term in April.
Ueda's appointment was seen as a surprise by the market, not to mention that there had previously been rumors that the dovish Masayoshi Amamiya would be appointed to replace Kuroda.
Ueda Hawkish or Dovish?
Perhaps this can be used as a clue to Ueda's stance which is still unknown whether he is a hawkish or dovish person.
In July last year, Ueda warned the BOJ against raising interest rates too soon just because inflation was temporarily above 2%.
However, he also suggested that the central bank should consider a strategy to exit its loose monetary policy and review the extraordinary stimulus program at some point.
If Ueda's appointment means the end of the BOJ's policy easing, then this is a good opportunity for the yen to rise.
However, if his stance is the same as Kuroda's, then the BOJ will implement tightening sooner rather than later.
At the time of writing, the yen was trading higher at around 130.00 against the greenback, slightly off its daily high of 129.80 following its initial reaction after the report.
