It looks like Prime Minister Shinzo Abe is on his way to getting the inflation he wants. Today, the yen saw its biggest slump against the dollar in 33 months. The dollar touched fresh at 94.075 yen, as it steadily moves to its 2010 peak at 94.99 yen. The volatility on one-month dollar/yen options also increased to above 13 percent, its highest level since August 2011. It would seem that Bank of Japan (BOJ) governor Masaaki Shirakawa’s announcement of his early exit affected the value of the yen in the market. On Tuesday, February 5, Shirakawa made public that he will be stepping down as BOJ chief three weeks earlier than expected. He said that because both his deputy governors’ terms will expire on March 19, he told Abe that he will resign at the same time so that his new governor would be able to choose his own deputy governors. No word, however, was given if Abe accepted the resignation of Shirakawa. Abe has been very vocal that he wants the next BOJ governor to have the same visions for Japan as he does. Some candidates that could be possible replacements of Shirakawa are Asian Development Bank President Haruhiko Kuroda and former BOJ deputy governor Toshiro Muto. It will be remembered that after consistent pressures from Abe, Shirakawa finally announced on January 22 that the BOJ will adopt a 2% inflation target and that it will commit itself to an open-ended asset-buying policy.

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