The Bank of Japan's sudden announcement on Tuesday to widen the volatility range of the 10-year government bond yield took the market by surprise, causing sharp fluctuations in Japanese stocks, bonds, and currency markets and sharp losses in Asian stocks.

(Bloomberg file photo)

Bank of Japan appears to be moving toward exiting easing policy

[Compile Lu Yongshan/Comprehensive Report] In order to solve the "dysfunction" of Japanese government bonds due to the continuous decline in liquidity, the Bank of Japan (that is, the Bank of Japan) suddenly announced on Tuesday that it will expand the fluctuation range of the ten-year government bond yield from the previous up and down ○.

25% raised to up and down ○.

5%, which surprised the market, causing violent fluctuations in the Japanese stock, bond, and foreign exchange markets and a sharp drop in Asian stocks.

While BOJ Governor Haruhiko Kuroda stressed that the move was not a rate hike or an abandonment of yield curve control, analysts pointed to it as a step toward an exit from the BOJ's accommodative policy.

Yen surges more than 3% against dollar at one point

Affected by this decision, the Japanese 10-year government bond yield from ○.

25% rose to 0.

46%, the largest increase since 2015; the yen rose more than 3% against the US dollar at one point; the Nikkei 225 index closed down about 2.5%.

Fives%.

Asian stocks fell almost across the board, and Taiwan stocks plummeted 263.

Twenty-nine points, a drop of one.

82%, the Hong Kong stock market and the Shanghai Composite Index also fell by more than 1%.

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Masamichi Adachi, chief Japan economist at UBS Securities, said that no matter how the BOJ interprets it, this is a step toward unwinding its accommodative policy and opens the door for a possible rate hike when a new governor takes office next April.

In the past, the Bank of Japan maintained an ultra-loose monetary policy in order to boost the sluggish economy, and bought its own government bonds on a large scale, which has led to a continuous decline in the liquidity of the bond market. Some analysts described the Japanese government bond market as "dysfunctional"; The amount, after excluding the discounted treasury bills, has come to 535.

62 trillion yen (3.92 trillion U.S. dollars), accounting for 50.5 percent of the total outstanding issuance.

Three percent, much higher than the eleventh in March 2013 when Kuroda became president.

Fives%.

Kyohei Morita, chief Japan economist at Nomura Securities, said that the Bank of Japan's holdings of super-large government bonds means that liquidity has evaporated. "They want to reactivate the bond market, even at the expense of yen appreciation."

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