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What Happened in Japan?

JAPAN
  • The BoJ surprised markets by widening the YCC tolerance band to +/- 50bps.
  • The BoJ obviously got to a point where enough was enough, noting that market volatility has heightened in recent months, with a modification in the YCC parameters apparently implemented to improve market functioning (the BoJ now holds over 50% of outstanding JGBs for the firsttime).
  • As a countermeasure to the potential for a fairly swift challenge of the BoJ's new YCC settings, it has decided to deploy upsized JGB purchases in Jan-Mar '23.
  • JPY sharply stronger, equities lower across the board, but off session lows through the European open.
MNI London Bureau | +44 203-865-3809 | edward.hardy@marketnews.com

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