The Bank of Japan said on Thursday that it would conduct emergency bond-buying operations, pledging to purchase around $667 million in government debt in an effort to stabilize bond prices.
The announcement came as the yen was on the verge of breaking 150 against the US dollar, a level that was last seen in 1990 and is viewed as psychologically important for markets.
The growing interest rate gap between the United States and Japan has been a major factor in the yen’s decline this year. The rate on 10-year debt has been hovering around 0% due to Japan’s “yield curve control” (YCC) policy, which has been in place for a long time.
However, there has been no sign of a policy shift from the central bank as it has consistently emphasized the necessity to keep policy ultra-loose, citing a sluggish recovery, weak domestic demand, and numerous external dangers.