Japan selling Treasuries

Discussion in 'Economics' started by maxpi, Dec 27, 2003.

  1. maxpi


    Check out Bloomberg TV, the story headline at the bottom of the screen says Japan is selling US Treasuries to buy currencies. Is that a big deal? Have not people been talking about how that would end the growth of the USA public sector?
  2. In fact foreign central banks like the ECB and BOJ have been huge buyers of US Bonds this year. In an effort to stem the rise in their currencies this year, ECB and BOJ have been buyers of the dollar and thus invested that money into US Treasuries.

    see link: http://biz.yahoo.com/rf/031226/economy_fed_foreigners_1.html
  3. I believe it was the Ministry of Finance selling bonds to the Bank of Japan, with the requirement that they eventually had to buy them back, so it's more like a loan for more firepower to sell yen since the BoJ is already near its yearly limit of yen sales. Any increase in this limit won't take place until the start of new fiscal year in April, so this is just a way of getting around it -- so not the same as selling treasuries on the open market.
  4. maxpi


    Thanks for the informative replies.
  5. What limit on the BoJ? Is this a self-limitation? If so, by who? Just curious if they work roughly similar to us...