Japan's prime minister is poised to nominate an advocate of aggressive monetary easing to be the nation's next central banker, a move that will likely further weaken the yen while providing a boost to stocks.
After weeks of speculation, multiple Japanese media reports indicate that Prime Minister Shinzo Abe has chosen Asian Development Bank President Haruhiko Kuroda to be the BoJ's next governor.
Kuroda was seen as a likely candidate due to his experience in international finance, and monetary prescriptions that largely mirror those of Abe.
Abe based his election campaign last year on a commitment to take radical steps to end years of deflation, combining promises of looser monetary policy with pledges of fiscal stimulus.
The Japanese yen has already weakened significantly in response to policy changes, falling almost 21% against the U.S. dollar since the beginning of October and driving up the stock market. It has also lost ground against the euro and some Asian peers, raising concerns that Japan may be engaged in a race to the bottom to promote exports.
The yen weakened further Monday on news of Kuroda's likely nomination, falling to 94.3 against the U.S. dollar. The Nikkei, meanwhile, gained 2% in early trading.
Weak currency cheapens the price of a country's exports, making them more attractive to international buyers by undercutting competitors. Japan's exporters have cheered the yen's decline, and Abe's popularity has skyrocketed in recent weeks.
Kuroda appears willing to follow through on Abe's policies, telling the Wall Street Journal earlier this month that Japan has "plenty of room for monetary easing."
"If necessary and if appropriate, of course additional monetary easing this year could be justified," he said.
Masaaki Shirakawa, the current BoJ head, has announced he will stand down on March 19, several weeks before his term was due to end. The official nomination of Kuroda, along with two deputies, is expected later this week.