The Bank of Japan (BoJ) announced Thursday it would hold unscheduled bond-buying operations to bring down the interest rates on government debt as the country’s benchmark yield climbed above the central bank’s policy ceiling. The move comes as the yen touches 150 to the US dollar, marking a 32-year low. Japan’s currency has seen volatile sessions in recent days despite last month’s intervention by Japanese authorities.
With the country’s currency continuing a downward trend against the greenback, interest rates on the government’s long-dated debts have risen in recent weeks. The BoJ said it plans to buy bonds ranging from 5-year to longer-dated debt. The central bank also separately offered to buy an unlimited quantity of 10-year notes at a yield of 0.25%.
The BOJ will purchase $667 million (100 billion yen) of JGBs with maturities of 10 to 20 years, another $667 million bonds with maturities of five to 10 years and $334 million of bonds with maturities longer than 25 years. The yen opened at 149.90 against the dollar Thursday after showing a burst of strength Wednesday. At 9:30 am GST, the yen continued to weaken with the currency reaching 149.93 against the greenback. The yen touched 150 at 11:38 am but recovered to 149.94 at 11:42 am. On Wednesday morning, the Asian currency was at 149.34.
Finance Minister Shunichi Suzuki had earlier said that they are ready to take action if needed. But in a speech delivered later Wednesday, BoJ board member Seiji Adachi said it was still premature to shift away from the central bank’s ultra-loose monetary policy. Adachi said that the firms' growth expectations have yet to rise, and they have yet to confirm a sustained rise in wages.
