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Surging yield forces BOJ to offer rare market operation again

The Bank of Japan's head office in Tokyo (Kyodo)

TOKYO (Kyodo) -- The Bank of Japan on Friday offered a rare bond purchase operation for the second time in a week as the central bank struggles to quell a surge in long-term interest rates amid speculation that it will tweak monetary stimulus next week.

The yield on the benchmark 10-year government bond, which the BOJ has pledged to guide close to zero percent as part of monetary easing, had risen as high as 0.105 percent.

The BOJ offered to buy an unlimited amount of bonds with five to 10 years left until maturity from financial institutions next Monday at a yield of 0.100 percent.

This was the sixth such operation since the tactic was introduced in September 2016. The BOJ had announced the fifth on Monday but there were no sellers.

The 10-year yield has been volatile this week, with some market participants anticipating a policy change at the BOJ's two-day policy meeting through next Tuesday in an effort to alleviate the side effects of the current easing measures on the banking sector.

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