SINGAPORE –

The nomination of the Bank of Japan's newest board member is prompting investor speculation Gov. Haruhiko Kuroda will find it easier to expand monetary stimulus.

Yukitoshi Funo, an adviser at Toyota Motor Corp. who previously ran its Asian business outside of Japan, is waiting to be confirmed by the Diet. Funo is set to replace Yoshihisa Morimoto, who voted against the BOJ's October decision to increase its asset purchases and whose term ends June 30. Kuroda won last year's policy vote with a majority of just 5 to 4. The move sent the yen plunging.

"Kuroda is in the mode to stimulate further," said Hideo Shimomura, the chief fund investor in Tokyo at Mitsubishi UFJ Asset Management, which oversees the equivalent of $66.9 billion. "New members will support him. The policy votes won't be a close call. Kuroda will easily get a majority."

The current pace of the central bank asset purchases has failed to prevent the inflation gauge the BOJ watches from falling to zero. Speculation Kuroda will seek more action has driven a rally in sovereign bonds that cut the two-year yield to minus 0.02 percent Friday. The yen will drop more than 4 percent against the dollar by year-end, according to a Bloomberg survey of economists.

Investors don't know much about Funo so they are basing their assessment on the fact that he was nominated by Prime Minister Shinzo Abe's administration and worked for Toyota, said Naruki Nakamura, the head of fixed income in Tokyo at BNP Paribas Investment Partners Japan. Its parent company manages or advises on the equivalent of $552 billion.

"Because he's from a manufacturer, he may welcome a weaker yen," Nakamura said. "The government was quite keen to choose a dovish person to continue the current easing policy."

The BOJ shouldn't expand its record monetary stimulus, as such a move would fail to spur growth and make prospects for an eventual exit from the policy harder, said Yoshimitsu Kobayashi, who started Monday as chairman of a business lobby, the Japan Association of Corporate Executives.

The BOJ governor keeps repeating he won't hesitate to adjust his stimulus program if necessary.

Kuroda is also pushing out his forecast for when inflation will reach the BOJ's 2 percent target. In January, he was predicting it would be in or around the current fiscal year, which started April 1 and ends March 31. Now he's saying it may happen early in the next business year.

The current policy is for the BOJ to boost its sovereign bond holdings by about ¥80 trillion ($673 billion) a year.

Twenty-two of 34 economists in a Bloomberg survey March 31 to April 3 predict the central bank will expand its stimulus program by the end of October. Three forecast Kuroda will act as soon as its April 30 meeting.

Kozo Yamamoto, a lawmaker and member of the ruling party, said Friday that a move this week is likely.

The yen has fallen 14 percent in the past year, which helps make exports more competitive at companies such as Toyota. The currency traded at ¥118.89 per dollar as of 11:39 a.m. Monday in Tokyo. In 2009, when the yen was at about 90 and Funo was an executive vice president at Toyota, he called the level "a bit painful."

The currency will weaken to 125 by year-end, based on the Bloomberg survey.

While the two-year yield was negative, its 10-year counterpart fell as low as 0.28 percent on Friday, a level not seen since Feb. 3.

If confirmed, Funo won't be the only new face on the board.

Yutaka Harada assumed a seat vacated last month by Ryuzo Miyao, who supported the Oct. 31 decision. Harada, an economist and former professor, said in March that further easing will be justified if prices don't rise and the deflationary mindset of the people deepens.