“Japanese Prime Minister Shinzo Abe said that buying foreign bonds will be unnecessary under a new central bank chief, backing away from a policy proposal that may be seen by other nations as an attempt to weaken the yen.
“We decided to consider this in November last year,” Abe said in parliament today, referring to a ruling party proposal to set up a fund to buy foreign bonds. “The need for this will basically disappear once we get the new BOJ governor and deputies in March.”
Avoiding foreign bond purchases would limit tension with Group of 20 nations that pledged this week to refrain from targeting exchange rates for competitive purposes. The yen is swinging as investors assess the limits of the economic campaign dubbed ‘Abenomics,’ with the prime minister preparing to choose a new BOJ governor next week.
“This effectively removes foreign bond buying as a policy option for Abe,” said Norio Miyagawa, a senior economist at Mizuho Securities Research and Consulting Co. in Tokyo. “The G-20 statement suggests that aiming to guide the yen lower by verbal intervention or other means such cannot be accepted.”
The yen rose 0.3 percent to 93.26 per dollar at 4:35 p.m. today in Tokyo after earlier falling as much as 0.3 percent. The Nikkei 225 Stock Average closed 0.8 percent higher.
Finance Minister Taro Aso said in the same parliamentary session today that the government has no intention to buy foreign bonds….”
