2023-09-29 04:05:59
The Bank of Japan announced an extraordinary government bond purchase operation during its monetary operations on the followingnoon of the 29th. The purchase amount is 300 billion yen, with a remaining term of more than 5 years but less than 10 years. The temporary operation has been carried out since August 3rd. The aim was to suppress interest rate increases as long-term interest rates rose to 0.77%, the highest level in 10 years.
The Bank of Japan conducts extraordinary operations every time long-term interest rates rise by 5 basis points (bp, 1 bp = 0.01%), from 0.6% to 0.65%, following the flexibilization of yield curve control (YCC) in July. However, since an increase in purchases would lead to further depreciation of the yen in the foreign exchange market, at the level of 0.7%, the Bank responded with a five-year common collateral operation instead of the same operation.
This time as well, in order to minimize the impact of the foreign exchange market, we have implemented 300 billion yen only for periods over 5 years but up to 10 years.
Katsutoshi Inadome, senior strategist at Sumitomo Mitsui Trust Asset Management, pointed out that the Bank of Japan intervened in approximately 5bp increments with regard to temporary government bond purchases, and that intervention was expected even at this level. However, he expressed his view that “I get the impression that the small amount of 300 billion yen has made them hesitant. They are definitely not trying to stop at this level, but the aim is to adjust the speed.”
Exterior of the Bank of Japan
Photographer: Kentaro Takahashi/Bloomberg
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