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Bank of Japan adjusts Government Bond Purchases Amid market Concerns
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Tokyo, Japan – The Bank of Japan (BOJ) has announced adjustments to its government bond purchase reduction program,sparking immediate reactions in the bond,foreign exchange,and stock markets on June 17,2025.The central bank’s decision to reduce the reduction in government bond purchases from April 2026, from approximately 400 billion yen to 200 billion yen per quarter, has led to concerns about potential increases in government bond supply, triggering selling pressure, notably in mid- to long-term zones.
Market Reactions to the BOJ’s Announcement
The bond market experienced a downturn following the BOJ’s announcement. The change in reduction measures for government bond supplementary supply, aimed at improving market liquidity, was perceived by some analysts as a signal of increased bond supply. Tamimi, a senior interest rate strategist at SMBC Nikko Securities, noted that the market found the change somewhat surprising, contributing to the selling pressure [1].
Did You Know? The Bank of japan’s policy interest rate remains steady at around 0.5%.
Yen Exchange Rate
The yen initially weakened against the dollar, briefly touching the low 145 yen range, but subsequently rebounded to the mid-144 yen range as market participants bought back the currency. This fluctuation reflects the market’s sensitivity to changes in monetary policy and their potential impact on currency valuations.
Stock Market Performance
Despite the bond market’s reaction,the Tokyo Stock Exchange demonstrated resilience. The Nikkei Stock Average rose by 0.6% to 38,522.21 yen, while the Tokyo Stock Price index (TOPIX) increased by 0.3% to 2785.96. Semiconductor-related stocks and industries such as electric and machinery experienced gains.
Pro Tip: Keep an eye on Governor Ueda Kazuo’s press conference for further insights into the BOJ’s monetary policy outlook.
detailed Market Movements
Here’s a snapshot of key market indicators as of 2:15 PM on June 17, 2025:
