Reuters: US Dollar Report: UPDATE 1-BOJ to pump $27 bln in operations to calm bond market

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UPDATE 1-BOJ to pump $27 bln in operations to calm bond market May 15th 2013, 05:44 Wed May 15, 2013 1:44am EDT By Takaya Yamaguchi TOKYO May 15 (Reuters) - The Bank of Japan offered on Wednesday to pump a massive amount of cash into the Tokyo money market in an attempt to soothe a spike in government-bond yields. The offer to inject 2.8 trillion yen ($27 billion) in market operations on Friday is more than three times the size usually offered in a single day. The benchmark 10-year Japanese government bond yield has spiked to its highest level in over a year this week as a relentless fall in the yen and surge in domestic share prices buffeted the debt market. The central bank announced on Wednesday it will offer 800 billion yen in one-month funds and 2 trillion yen in one-year funds on Friday. It usually offers just 800 billion yen in one-month funds for such operations. The larger-than-usual fund injection is "a response to sharp rises in longer-term interest rates," a BOJ official said on Wednesday. JGBs erased looses and turned positive after the BOJ's announcement, which markets took as a sign the central bank will not tolerate excessive rises in bond yields. The 10-year JGB futures price was up 0.13 point on the day at 142.24, having recovered from a low of 142.36, while the yield on 10-year bonds fell to 0.845 percent from a one-year high of 0.920 percent. Wednesday's announcement was similar to, but less dramatic than, a huge funding operation the BOJ conducted during market turbulence shortly after it unveiled massive monetary easing plans on April 4. For that month the central bank injected 7.2 trillion in one-year funds, a rare maturity for the BOJ. Link this Share this Digg this Email Reprints

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