Japan likely to nominate ADB's Kuroda as BOJ head: sources

Sun Feb 24, 2013 6:32pm EST
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By Leika Kihara and Yuko Yoshikawa

TOKYO (Reuters) - Japan's government is likely to nominate Asian Development Bank President Haruhiko Kuroda, an advocate of aggressive monetary easing, as its next central bank governor, sources told Reuters on Monday.

Prime Minister Shinzo Abe is also seen filling one of two deputy governor posts with Kikuo Iwata, an academic critical of Bank of Japan policy and an advocate of unorthodox monetary easing steps, the Nikkei newspaper reported.

The yen sank 1.4 percent in early trade to 94.67 against the dollar on expectations the reported nominees will steer the central bank toward bolder monetary stimulus measures.

"Kuroda's nomination won't change the course that has been dictated by Abe in recent months - that is aggressive monetary policy, but perhaps thanks to the inclusion of Iwata the market will expect more eye-catching bold easing measures," said Masamichi Adachi, senior economist at JPMorgan Securities in Tokyo.

The government will submit its nominations for the governor and two deputy governor posts to parliament this week. The incumbents leave on March 19.

Kuroda, 68, has been considered a strong candidate to replace current BOJ Governor Masaaki Shirakawa because of his extensive experience in international policy and his calls for more aggressive monetary easing that matched the views of Abe.

The choice of Kuroda, who has long criticized the BOJ as too slow in expanding stimulus, will likely nudge the central bank into more aggressive, unorthodox measures to achieve its new 2 percent inflation target set in January.

As Japan's top financial diplomat from 1999 to 2003, Kuroda aggressively intervened in the exchange-rate market to weaken the yen to support the country's export-reliant economy.   Continued...

Asian Development Bank President Haruhiko Kuroda speaks during a group interview in Tokyo February 11, 2013. REUTERS/Toru Hanai