HONG KONG (Reuters) – Speculation the Bank of Japan may slow its monetary stimulus this year gripped the currency market on Tuesday after the central bank trimmed the amount of its purchases of Japanese government bonds.
While the bond-buying operations are usually seen as a routine affair, traders appeared to latch on to the BOJ announcement that it will buy less of the long-dated bonds, sending the dollar down about 0.5 percent against the yen.
Announcement - Speculation - BOJ - Stimulus - Maybank
“This (announcement) adds to speculation that BOJ may remove monetary stimulus,” Maybank analysts said in a note after the announcement.
BOJ Governor Haruhiko Kuroda has repeatedly dismissed the chance of withdrawing stimulus any time soon, even as some policymakers have recently expressed concerns over the perceived demerits of monetary easing, especially the hit on financial institutions’ profit margins.
BOJ - Interest - Rates - Minus - Percent
The BOJ pledged in 2016 to guide short-term interest rates at minus 0.1 percent and 10-year bond yields at around zero percent. It also keeps a loose pledge to increase its bond holdings at 80 trillion yen ($710.29 billion) per year, although its buying has recently slowed.
It also offered to buy 190 billion yen of 10-25 year JGBs and 80 billion...
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