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Japan's central bank maintains bond purchases after earlier jolt, JGBs bounce

Reuters  |  TOKYO 

By Hideyuki Sano

TOKYO (Reuters) - The of maintained the amount of its bond purchases on Thursday, helping to soothe a market rattled earlier this week by a cut in its buying of longer-dated debt that fanned worries the central may be moving to turn off its stimulus.

The maintained the size of its buying in one- to three-, three- to five-, and five- to ten-year at 250 billion yen ($2.24 billion), 300 billion yen and 410 billion yen respectively.

The 10-year JGB futures were up 0.13 in price, paring some of their total losses of 0.37 point over the past two days after the on Tuesday reduced its buying in JGBs with more than 10 years to maturity.

Most market players expected the to avoid causing another shock in the market, especially after U.S. bond markets were shaken by a report that China, the biggest foreign holder of U.S. Treasuries, could slow or stop buying government

China's foreign exchange regulator said on Thursday the report may be based on erroneous information and could be "fake", helping to underpin both U.S. and Japanese

The 10-year JGB yield ticked down 1.0 basis point to 0.070 percent from Wednesday's 2-1/2-month high of 0.080 percent.

The 20-year yield fell 1.0 percent to 0.590 percent but 40-year lagged the recovery, with their yield unchanged at 1.010 percent ahead of Friday's 40-year bond auction.


Given the is already holding almost a half of the market after nearly five years of massive bond buying, many traders believe the central has little choice but to continue with its gradual reduction in bond purchase.

Although has repeatedly dismissed the chance of withdrawing stimulus any time soon, some policymakers have recently expressed concerns over the perceived demerits of monetary easing, especially the hit on financial institutions' profit margins.

"The will need to reduce bond buying further. It also probably wants to steepen the yield curve, within the limit of not giving the impression that it is tightening its policy," said Takehiro Noguchi, at

On Tuesday, markets were surprised by the BOJ's decision to reduce its purchases of 10 to 25 year JGBs and 25 to 40 JGBs paper by 10 billion yen each, from its previous operations, to 190 billion yen and 80 billion respectively.

The announcement has helped to lift the yen to six-week highs of 111.27 to the dollar on Wednesday from around 113.10 yen early on Tuesday.

($1 = 111.58 yen)

(Reporting by Hideyuki Sano; Editing by Shri Navaratnam)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Thu, January 11 2018. 11:50 IST