Japanese authorities are planning emergency bond purchasing

On Thursday, the central bank of Japan announced its intention to organize and conduct emergency bond-purchasing operations aimed at setting a lower bond price limit. The main financial institution of the country is planning to carry out those acts by offering to purchase about $667 million in government debt.

The intention after the Japanese national currency had approached the level of 150 to the dollar, the breaching of which would mean a new record low in more than thirty years. Such a case might be considered as a meaningful event for market participants, especially in psychological terms.

The yen has been experiencing a profoundly negative impact of the growing differentiation between interest rates of the U.S. and Japan. According to an opinion of some investors, there’s a strong probability that Japan will be forced to abandon its long-standing policy of YCC, or "yield curve control". This policy suggests purchasing bonds in large volumes to hold the yield on 10-year debt at nearly 0%.

Still, at the moment, there are no signals indicating that the central bank of Japan is going to change its main policy. Japanese authorities have stated over and over again the necessity to preserve Japan’s ultra-loose policy, with such factors as cautious recovery, weak domestic demand and various foreign risks being cited as main arguments.