Japanese markets expressed surprise Friday following reports that former Bank of Japan Policy Board member Kazuo Ueda is expected to be tapped as the central bank's next governor, with analysts welcoming his background and expertise in finance.
Prime Minister Fumio Kishida also plans to present former Financial Services Agency chief Ryozo Himino and BOJ Executive Director Shinichi Uchida as new deputy governors to parliament next Tuesday, according to a source familiar with the matter.
The choice came out of the blue for financial markets, which viewed the bank's Deputy Governor Masayoshi Amamiya, who has been instrumental in designing Japan's bold monetary easing program under incumbent Governor Haruhiko Kuroda, as a strong candidate following a report earlier in the week that said the government approached him.
"The lineup gives an impression that they will attempt to normalize monetary policy during their five-year term," said Shotaro Kugo, senior economist at Daiwa Institute of Research.
Ueda is believed to have been chosen due to his credentials as an academic, alongside his experience as a former BOJ Policy Board member in brokering dialogue between the bank and financial markets, Kugo said.
He has been a professor at Kyoritsu Women's University in Tokyo since April 2017 and has a bachelor's degree in mathematics from the University of Tokyo, as well as a doctorate in economics from the Massachusetts Institute of Technology in the United States.
Kishida's plan comes as a surprise after expectations had grown for Amamiya's appointment, "but there should be no opposition regarding his abilities," said Yoshimasa Maruyama, chief market economist at SMBC Nikko Securities Inc., expressing approval at the "balanced" personnel choice.
Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management Co., noted that Kishida managed to find someone acceptable to many while showing that his selection is different from his predecessors.
He added that the BOJ is likely to gradually tighten its monetary policy under Ueda, a move expected to strengthen the yen and lead to a rise in long-term interest rates.
The Japanese yen briefly rose in the afternoon to the 129 level against the U.S. dollar from the mid-131 zone following the reports.
