Asian policymakers braced for a flood of capital unleashed by the Bank of Japan's (BOJ) huge monetary stimulus, but some conceded yesterday the impact on global money flows and currencies might prove to be a necessary side-effect to get the region's No 2 economy growing.

New BOJ governor Haruhiko Kuroda on Thursday promised to inject about $1.4 trillion into the Japanese economy in less than two years and committed the bank to open-ended asset buying, a dose of shock therapy officials hope will end two decades of stagnation.

The stronger-than-expected measures, which appeared to catch other regional officials by surprise, spurred a sharp sell-off in the yen across the board and risked upsetting other Asian exporters who may lose competitiveness.

A resurgence of the carry trade - borrowing cheap yen to invest in other higher yielding assets - has also been a sore point around the region, but policymakers played down concerns about damaging and distorting impacts on asset prices and currencies.

"We can't say for sure whether this policy will lead to a yen carry trade and flooding in cheap foreign funds (on the local markets) because there are a lot of stages that such a policy has to go through before leading to actual carry trades," a senior official at the Bank of Korea said.

"Even if the BOJ succeeds in expanding the base money liquidity, you can't say for sure the extra money will flow out of Japan in the form of short-term money."

The Hong Kong Monetary Authority echoed South Korea's wait-and-see approach, while Singapore highlighted the importance of rebooting the dormant Japan economy.-Reuters