
| Japan Economy
MOF to resume govt. bond buying: Miyazawa
Japan's Ministry of Finance will resume purchases of government bonds on the secondary market, suspended since January, for February and March only and limited to 200 billion yen each month, Finance Minister Kiichi Miyazawa told reportersTuesday morning.
To support the effort to stem the rise in long-term interest rates, the March issue of10-year government bonds will be cut back to 1.4 trillion yen, shifting the 400 billion yen difference from the previous month to two-year and six-year issues.
Miyazawa's announcement of renewed bond buying by the ministry's Trust Fund Bureau and a reduction in new issues of 10-year government debt had an immediate effect on the markets: long-term interest rates dropped sharply Tuesday morning, the Nikkei Stock Average posted strong gains, and the yen slumped against the dollar, at one point falling to the mid-117-yen level, the weakest it has been in Tokyo for about two months.
Regarding the government's policy on new bond issues in and after fiscal 1999 starting April, Miyazawa would only say, ''that will be determined taking into account the state of the economy and the interest-rate situation [at the time]."
The ministry's bond purchasing exercise will take place in two tranches each month of 100 billion yen each.
In the third supplementary budget for fiscal 1998, the Finance Ministry raised its monthly issues of 10-year government bonds to 1.8 trillion yen from 1.4 trillion yen and has plans for another substantial increase next fiscal year.
As a result, market fears of a massive overhang of government debt are growing, analysts say.In another move designed to put a cap on a long-term interest rate rise fueled by those market concerns, the Bank of Japan last Friday said it would guide short-term rates lower.
(Asia Pulse)
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