MNI: BOJ Cuts Scale of 5-10 Year JGB Purchases Amid Low Rates

     TOKYO (MNI) - With Japanese government bond yields lower, the Bank of Japan

Friday lowered the size of its purchases of JGBs with a remaining life of 5 to

10 years to Y430 billion from Y450 billion at the previous similar operation,

held on Dec. 5.

     JGBs were little changed after the BOJ's operation.

     The reduction of scale of the 5/10-year bucket was the first reduced

purcahse since Aug. 3, when the scale of bond buying was reduced to Y400 billion

from Y410 billion.

     On Sept 6, the BOJ increased the scale of purchase of those bonds to Y450

billion from Y400 billion to curb a rise in bond yields.

     BOJ officials maintain the view that if market conditions warrant it, they

stand ready to lower the scale of purchases based on the view that less

intervention was needed to stabilise 10-year yields around 0%.

     The 10-year bond yield traded at around 0.040% in early morning trade

Friday, after falling to 0.035% earlier this week, the lowest level since July

20.

     The BOJ has reduced the frequency of medium- and super long-term bond

buying operation to four times in a month from five times and the focus has

shifted to when the BOJ will lower the frequency of long-term bond buying

operations to four times from five times.

--MNI Tokyo Bureau; tel: +81 90-2175-0040; email: hiroshi.inoue@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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