BlackRock, Inc. (NYSE:BLK), the world’s largest investment firm, started reducing its bets against the yen right before the Bank of Japan governor Haruhiko Kuroda announced aggressive policy measures last Thursday.
BlackRock, Inc. (NYSE:BLK)’s chief investment officer of fundamental fixed income and co-head of America’s fixed income, Rick Rieder talked about the shift during an interview with the Wall Street Journal.
The money manager has been shorting the yen for several months now, but pulled back the firm’s bearish bets after the Bank of Japan announced massive bond-purchasing program to stimulate the Japanese economy. BlackRock inc. (NYSE:BLK) booked a healthy profit due to the yen’s swift decline.
The Japanese currency is down 14 percent so far this year versus the dollar. The Bank of Japan announced to purchase assets worth $1.4 trillion in the next two years to beat deflation.
Like many other investors, BlackRock, Inc. (NYSE:BLK) thinks that the bond purchase program would help the other sovereign debt markets as investors across the world flee yen-based investments. The shift is taking place even when the Eurozone debt crisis remains unsolved and the U.S. economic recovery was hurt by disappointing jobs data last week. The yen is sliding to multi-year lows.
BlackRock Inc (NYSE:BLK) said that the U.S. Federal Reserve and Bank of Japan are taking out of the market a large amount of supply of Treasuries and Japanese government bonds. Mr. Rieder called the BoJ announcement a bid deal. BlackRock, Inc. (NYSE:BLK) has over $3.7 trillion of AUM, and Mr. Rieder oversees $763 million.
Since the Bank of Japan’s announcement the Japanese currency has been fluctuating dramatically. However, Mr. Rieder thinks that the yen still has more room to decline in the future.
Talking about the European markets, Mr. Rieder said that there is a big question over the growth of European countries, especially as Japan and United States’ aggressive stimulus programs would keep the euro strong against both the major currencies.
A strong euro will affect European exports and the ECB has very few tools left at its disposal to handle the situation.