BOJ buys $6B from Finance Ministry, an 'extremely extraordinary' response to covid pandemic

Dhwani Mehta FXStreet

The Japanese Finance Ministry’s response to the Bank of Japan’s (BOJ) dollar funding on Wednesday was an 'extremely extraordinary' response under the coronavirus pandemic, a Ministry official said in the last minutes.

The BOJ will buy USD6 billion from the Ministry of Finance any time through to the end of March next year at the prevailing market exchange rate at the time, the central bank said in a statement early Wednesday.

This will be the first time that the BOJ will buy dollars from a government account.

The move is "in preparation for smoother execution of the Bank of Japan's operations, such as international financial cooperation and foreign currency supply to financial institutions," the BOJ said in its statement.

The BOJ's announcement comes ahead of its two-day monetary policy review that concludes on Friday.

Market reaction

Despite the BOJ move, the yen stands resilient so far this Wednesday, with USD/JPY keeping the downside bias intact around 103.60.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

EUR/USD looks to regain the 200-day SMA

EUR/USD regains some balance and trade just above 1.1600 the figure ahead of the opening bell in Asia. The pair initially dipped to the 1.1530 zone for the first time since November, always following the stronger US Dollar and the marked flight-to-safety in the context of the ongoing Middle East crisis

GBP/USD attacks 1.3300, refreshing three-month lows

GBP/USD is deep in the red near 1.3300, accelerating its downside to renew three-month lows in European trading on Tuesday. The ongoing escalation in the Iran war, combined with rising Oil prices, weighs negatively on the higher-yielding Pound Sterling as the US Dollar capitalizes on increased haven demand.

Gold bounces off lows, back above $5,100

Gold remains on the defensive, eroding part of the recent multi-day advance and managing to trade back above the $5,100 mark per troy ounce on Tuesday. The precious metal initially dropped just below the critical $5,000 threshold on the back of the persistent strength of the Greenback, higher US Treasury yields across the curve and investors' repricing of Fed rate cuts.