Bank of Japan to conduct emergency bond buying as yen teeters near 150

TOKYO (Reuters) – Japan’s central bank on Thursday said it would hold emergency bond-buying operations, offering to buy some $667 million in government debt, a move designed to put a floor under bond prices.

The announcement from the Bank of Japan came as the yen currency teetered at the break of 150 to the dollar, a level that would mark a 32-year-low and has been seen as psychologically important for market players.

The yen has been hammered this year by the widening difference between U.S. and Japanese interest rates. Some investors have bet Japan will need to ditch its long policy of “yield curve control”, or YCC, – where it buys massive amounts of bonds to keep the yield on 10-year debt at around 0%.

But the central bank has so far showed no sign of changing tack. Policymakers in the world’s third-largest economy have repeatedly stressed the need to keep policy ultra-loose, citing a fragile recovery, weak domestic demand and plenty of overseas risks.

Thursday’s move showed the BOJ was continuing to buy bonds and keeping the YCC policy in place. The central bank said it would buy 100 billion yen ($667 million) of JGBs with maturities of 10-20 years and another 100 billion of bonds with maturities of 5-10 years.

The yield on the benchmark 10-year JGB briefly touched 0.255% for the second straight day, above the BOJ’s policy ceiling, before retreating to 0.25%, within the band.

($1 = 149.9300 yen)

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