Bank of Japan Increases JGB Purchase

123jump.com Staff
18 Mar, 2009
New York City

Bank of Japan to increase JGB purchases to 21.6 trillion yen per year. Separately the central bank elected to keep its key rate unchanged at 0.1%. Japan

[R]5:00AM New York, 7:00PM Tokyo - Bank of Japan to increase JGB purchases to 21.6 trillion yen per year. Japan’s crude steel output falls 44.2% in February.[/R]

The benchmark stock index increased 0.3% after the central bank committed to increase JGB purchases to provide additional liquidity to the market.

In Tokyo trading Nikkei 225 index gained 0.3% or 23.04 to 7,972.17, and the broader Topix Index edged up 0.5% or 4.03 to 764.67.

In the first section of the Tokyo Stock Exchange 12.5 billion shares worth 741 billion yen were traded and in the second section 161 million shares valued at 4 billion yen changed hands.

Of the Nikkei 225 index stocks, 17 rose, 129 declined, and 11 were unchanged. Pioneer Corp. led gainers in the index shares with a rise of 13.8% followed Tokio Marine HD increasing 10%.

Bank of Japan to Increase JGB Purchases

Bank of Japan reported today the policy board has decided to increase the amount of outright purchases of Japanese government bonds from 16.8 trillion yen per year to 21.6 trillion yen per year effective this month.

The central bank will purchase 7.4 trillion yen per year of bonds with coupons with a residual maturity of up to 1 year, while 12 trillion yen per year of bonds with a residual maturity of more than 1 year and up to 10 years will also be purchased.

Separately the central bank elected to keep its key rate unchanged at 0.1% and noted that the “continued provision of substantial liquidity is required to ensure stability in the financial markets.

Financial markets have remained tight despite improvements in issuing conditions for commercial paper and corporate bonds. The BoJ forecasts that the economy will start recovering from the latter part of 2009 though conditions remain uncertain.

“In addition to secure stability in the financial system, the Bank resumed its purchases of stocks held by banks, and decided yesterday to explore a framework to provide subordinated loans to banks,” explained the central bank.

Japan’s Crude Steel Output Falls 44.2% in February

Nikkei News reported today that Japan Iron and Steel Federation said the country’s crude steel production dropped 14.2% from a month earlier and declined 44.2% in February from the same period a year earlier, falling from the fifth straight month.

Yen Drops 0.03% Against Dollar

The yen dropped 0.03% to 98.66 against the dollar from 98.63 yesterday.

Gainers & Losers

Pioneer Corp. led advancers in the Nikkei 225 index shares with a rise of 13.8% followed by increases in Tokio Marine HD of 10%, in Asahi Glass of 7.4%, in Marui Group of 6.5%, and Mazda Motor of 6.3%.

NSK Ltd led decliners in the Nikkei 225 index shares with a fall of 5.9% followed by losses in Chugai Pharmaceutical of 5.9%, in Isuzu Motors of 5.2%, in Jtekt Corp. of 5%, and Yokohama Rubber of 4.9%.

Yokohama Rubber fell after crude oil prices rose 3.8% to $49.20 per barrel.

Paper companies also dropped. Nippon Paper tumbled 3.3% and Mitsubishi Paper plunged 3%.