Stocks Rally, Yen Drops As BOJ Eases Rate Worries

Global shares rose and the yen fell after the Bank of Japan’s deputy governor stated that interest rates would not be raised if markets remain unstable, supporting a recovery following the recent global meltdown, Winnie Hsu reported for Bloomberg News.

The Euro Stoxx 50 futures advanced 1.3%, alongside gains in U.S. futures. I Photo: Patrick Beek Flickr

The Euro Stoxx 50 futures advanced 1.3%, alongside gains in U.S. futures. This followed a strong session in Asia, where Japanese stocks led a broad rally after the yen dropped by over 2% against the dollar, reflecting the benefits of a cheaper currency for an export-oriented economy.

An Asian equities gauge gained 1.5%. Treasury yields and a Bloomberg dollar index also edged higher.

The latest return of risk appetite came after BOJ Deputy Governor Shinichi Uchida sent a strong dovish signal, indicating that the central bank’s rate path would shift if the economic outlook is impacted by market conditions.

His comments came in the wake of efforts by Japan’s government and central bank to present a united front in restoring calm to markets, amid growing criticism of last week’s abrupt monetary tightening.

Uchida was seeking to reassure markets after the BOJ unexpectedly tightened policy on July 31 and indicated a more aggressive rate-hiking path than some traders had anticipated.