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BOJ to lift number of monthly bond buys
Aggregated Source: Shanghai Daily: Business

THE Bank of Japan will increase the number of its monthly government bond purchases after market participants on Wednesday asked for the move to tame volatility in debt prices.

The central bank will purchase Japanese government bonds about 8 to 10 times a month starting in June, compared with the current pace of around 8 times, according to a BOJ statement yesterday in Tokyo. In a meeting with central bank officials yesterday, most market participants agreed to a proposal to boost such operations.

The BOJ is trying to steady a debt market where volatility has risen to the highest in four years in the wake of unprecedented monetary easing steps last month. Wednesday's gathering with bond market players is the third under the tenure of Governor Haruhiko Kuroda, who last week reiterated a pledge to improve communication on central bank policy.

"The bank has allowed excessive volatility to remain in the JGB market for as much as seven weeks," Shogo Fujita, the chief Japanese bond strategist in Tokyo at Bank of America Merrill Lynch, one of the 24 primary dealers obliged to bid at government auctions, said before Wednesday's meeting.

"The situation doesn't raise Kuroda's credibility so far," he said.

The yield on the benchmark 10-year Japanese government bond jumped to a more than one-year high of 1 percent last week, even after the BOJ pledged to double bond purchases to end 15 years of deflation in the world's third-largest economy.

Kuroda indicated this week that Japan can weather an increase in yields if it occurs alongside an economic recovery.

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Copyright Shanghai Daily: Business