TOKYO: Japanese government bond yields rose on Monday amid hawkish undertones in a summary of opinions from this month’s Bank of Japan (BOJ) meeting, while the sliding yen increased pressure on the central bank to tighten monetary policy.
The 10-year JGB yield rose 2 basis points (bps) to 0.995% as of 0520 GMT, the highest level since June 12. Benchmark 10-year JGB futures fell 0.11 yen to 143.52.
The yen dropped as low as 159.94 per dollar for the first time since April 29, when its plunge to a 34-year trough of 160.245 provoked Japan’s finance ministry to spend some 9.79 trillion yen ($61.35 billion) to support it.
Finance Minister Shunichi Suzuki and top currency diplomat Masato Kanda each warned on Monday that officials stand ready to respond as appropriate to excessive currency swings.
Meanwhile, a summary of the latest BOJ gathering this month showed that policy makers debated the chance of a near-term interest rate increase, with one person calling for a hike without delay.
“The summary of opinions was pretty hawkish: very constructive on near-term rate hikes, and worried about yen weakness affecting inflation expectations,” said Naka Matsuzawa, chief macro strategist at Nomura.
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“If the Ministry of Finance intervenes in the currency market, that will put additional presure on the BOJ.”
The 20-year JGB yield climbed 2.5 bps to 1.83%, and the 30-year yield jumped 3 bps to 2.175%.
The two-year yield rose 0.5 bp to 0.31%. The five-year yield was flat at 0.54%.
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