BOJ Offering Big Funds to Counter Interest Rate Hikes
ZFX - The Bank of Japan offered bond purchases in a bid to counter the increasing interest rates in the short-term worth $97 billion.
On Tuesday, making two offers, the central bank plans to buy 7 trillion yen in funds injection and bonds of 2 trillion yen for the December 15-16 period.
Both of these offerings are within an bond sell agreement.
The central bank would have a combined 11 trillion yen in injections for the first operation carried out in nearly two years of a total of 11 trillion yen.
"With interest rates nearing the zero mark, it's an obvious sign that the pressure on the money market has not receded even after Monday's bids," said Naomi Mugurama, Mitsubishi UFJ Senior Market Economist.
"Likely to hold back the rate hikes, the BOJ plans to make an offer of buying bonds for the second day already,: he said.
Due to the increment of fund demands towards the end of the year, money market prices have steadily gone up.
If we take a look at USDJPY from a technical POV, the pair seems to be in a general bullish trend, seeing that it bounced from the 112,700 support which was also a trendline in that area. The movement above the 100 and 200 MA lines further confirms this. In the last few days, we can still look at it as choppy, as it's still stuck at the mini resistance at 113,680, with the 50 MA line holding it at the same level.
This very sentiment will probably influence the pair's value in the future, with the hike in interest rates bringing it further down. It could be countered by an expansionary disbursement of fund, of which will balance the value.
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