BOJ participates in bond buying, tapering fears dissipate as USD spikes to ‎¥115.00

The Japanes Yen is weakening across the board following the decision by the Bank of Japan to participate in bond market operations today.

BOJ has made offers to buy over 2.5 trillion yens worth of bonds from T-bills to 10 years, disipating any shrort term risks that the Central Bank may have been considering any type of tapering, following the decision to stay out of the market Wednesday.

Not participating in the purchase of bonds earlier this week led to increased selling in the fixed income market, which in turn allowed the Yen to remain fairly strong up until yesterday.

USD/JPY is last exchanging hands just a few pips short of 115.00 as the market rests assured that the Bank of Japan will continue to engage in its planned montly bond purchasing program, essentially communicating they have no intention of tapering.

Shuichi Ohsaki, Rates Strategist at Merrill Lynch (Japan), gave his view on the recent inactivity earlier this week by the BOJ to not purchase bonds: "Given the BoJ’s purchases and foreign investors aggressive buying, this sector was running out of saleable bonds, so the BoJ might have decided to reduce its purchases before its operations were undersubscribed. Another possibility is that the BoJ judged this sector’s yields to be too low relative to the yield curve it desires..."