BOJ Stimulus Expansion Sees Fallout

Bank of Japan Governor Haruhiko Kuroda’s expanded stimulus is highlighting the split in Asia’s foreign-exchange market.

On one side are South Korea’s won and Taiwan’s dollar, which ING Groep NV and Westpac Banking Corp. say will weaken as policy makers look to intervene to offset the impact of the falling yen, a result of Kuroda’s policies. On the other are Indonesia’s rupiah and India (GIND10YR)’s rupee, which they see gaining as investors flee Japan in search of higher yields.

The divergence follows the BOJ’s decision on Oct. 31 to lift the annual target for enlarging Japan’s monetary base to 80 trillion yen ($698 billion), from 60 to 70 trillion yen. Korea competes with Japan to export electronics, ships and cars, making the won most exposed to Kuroda’s policy. Taiwan is home to the world’s biggest contract chipmakers and producers of notebook computers.

Bloomberg

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