On Friday, the Bank of Japan (BOJ)’s shocked market will announce it will rewind $250 billion in exchange funds (ETFs) and Japanese Real Estate Investment Trusts (JREITS), assets accumulated since 2010 as part of ultra-loss monetary policy.
Under the plan, the central bank will sell ETFs at a book value of 3300 billion yen ($2.2 billion) per year, equivalent to market prices of 620 billion yen ($4.2 billion). Boj Gognelor Ueda emphasized that the pace would be intentionally slower, noting that it would take more than a century to completely dispose of its holdings.
The announcement came along with the decision to keep the bank’s benchmark rate at 0.5% in a 7-2 split vote. The uncertainty about the decision on the next rate, which the two members are seeking immediate hikes, raised expectations that they would soon tighten up in October. Japan’s core CPI rose to 2.7% in August, well above BOJ’s 2% target.
Japan fell more than 1% on Friday, with Japan’s 2010 JGB rising to 1.64%. Crypto immersed together, with Bitcoin just over $116,000 after threatening 118,000 hours ago.
This movement comes against a fragile background. As reported by Coindesk, Japan’s debt-to-GDP ratio is close to 240%, with bond yields reaching a massive high. Increased borrowing costs can pose serious risks to fiscal sustainability.
