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.

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