BOJ will monitor impact of Ukraine tension on oil moves

Governor of the Bank of Japan, Haruhiko Kuroda, said on Thursday that the Bank of Japan will carefully monitor how escalating tensions in Ukraine could affect oil prices given Japan's heavy reliance on energy imports.

Reuters reported that Kuroda also told parliament it was desirable for currency rates to move stably reflecting economic fundamentals, adding that recent yen moves were "largely in line with this trend."

Key notes

BoJ has no plan to seek early modification of easy policy.

BoJ will monitor various range of data, including surveys on how people perceive price moves, in gauging inflation.

BoJ will carefully monitor impact of Ukraine tensions on oil prices, given japan's heavy dependence on energy imports.

Kuroda says it is desirable for forex rates to move stably reflecting fundamentals, think recent yen moves are in line with this desirable trend.

If yen weakens further, that will work to push up import prices.

Recent rise in import prices driven mostly by rises in dollar-based raw material costs rather than via weak yen.

FX moves on various factors so can't say divergence in monetary policy directions will definitely lead to weak yen.

WTI price, daily chart