I guess we know where all the money came from to keep the global markets from crashing...
JPY carry trade and a big fear of deflation out of the fed(s), i guess the leveraged players get nervous when rates get a few tics above %0.00 in japan and sell everything they can
BOJ injects funds to market to check rapid rate rises
The Bank of Japan on Thursday morning injected 500 billion yen into the money market in a same-day bill-buying operation, in a bid to curb recent surges in short-term interest rates.
It is the central bank's first same-day fund-supplying money market operation in about 15 months.
Overnight interest rates have been rising at a quick pace recently, causing worries among market players, a senior BOJ official said.
The weighted average of unsecured overnight call rates, the BOJ's monetary policy target, rose to 0.035 percent on Wednesday. The key short-term interbank rate stood at around 0.001 percent under the BOJ's quantitative easing policy, which ended in March.
The sharp rise in the call rate reflects progress in the BOJ's fund absorption from the banking system since it scrapped the extremely accommodative monetary policy. The balance of private financial institutions' current account deposits with the BOJ totaled 12.54 trillion yen on Wednesday, nearly one-third of their peak.
The BOJ announced its fund injection on Thursday after the call rate hit 0.08 percent. The rate dropped temporarily after the announcement but bounced back soon and stayed at 0.05 to 0.07 percent in late morning trading.
Financial market players welcomed the fund-supplying operation by the central bank.
The BOJ's operation indicated interest rate levels the central bank currently deems too high, a market source said. A major bank official said the BOJ action will help check rate rises to some extent. (Jiji Press)
May 25, 2006
