The Japanese yen is flying in Asia, surging by around 0.5% against the US dollar.
Having hit a high of 113.18 earlier in the session, the USD/JPY is now trading at 112.55, a decrease of 0.47%.
USD/JPY 5-Minute Chart
“The Bank of Japan (BoJ) on Tuesday reduced the amount of its buying in Japanese government bonds (JGBs) with 10 to 25 years left to maturity and those with 25 to 40 years to maturity by 10 billion yen from its previous operations,” said Reuters, referring to asset purchases made by the BoJ as part of its quantitative and qualitative easing (QQE) program.
“The BOJ offered to buy 190 billion yen of 10-25 year JGBs, compared to 200 billion yen previously, and 80 billion yen of 25-40 year JGBs, compared to 90 billion yen in the past.”
The announcement has placed pressure on JGBs, helping to lift yields and the yen as a consequence.
It may also be interpreted by some investors as another small step from the Bank of Japan towards reversing ultra-easy monetary policy settings, mirroring the actions from other major central banks in recent times.
The BoJ has pledged to buy JGBs at an annual pace of around 80 trillion yen per annum in order to anchor benchmark 10-year government bond yields at around 0%.
Despite that hard target, the BoJ has been making significantly lower bond purchases in recent months, raising speculation among some investors that it may drop its annual purchase target all together.