THE Bank of Japan (BOJ) said on Tuesday (Apr 26) it will extend an offer to buy unlimited amounts of 10-year Japanese government bonds (JGB) by 2 more days, sending their benchmark yields to the lowest in more than a week.

The offer to purchase of unlimited amounts at a fixed rate of 0.25 per cent until Thursday, prompted a fall in the 10-year JGB yield to 0.235 per cent, its lowest since Apr 15.

Despite the central bank's offer to buy unlimited bonds during the previous 4 days, the yield had remained flat at around 0.245 per cent.

The BoJ had also conducted a single-day operation to lower the yield last Wednesday before it launched its offer over those 4 days.

The central bank aims to keep the 10-year JGB yields from rising above the implicit 0.25 per cent cap it sets around its 0 per cent target, even as other nations are to raise rates to combat inflation.

Compared with other nations, Japan's inflation is modest and its economy is still operating below pre-pandemic levels.

The central bank is set to hold a policy meeting on Wednesday and Thursday.

"It is pretty rare that the Bank of Japan conducts a fixed-rate bond offering when the policy meeting is held," said Masaaki Kanno, chief economist at Sony Financial Group and a former BOJ official.

"This means it really wants to send a strong message that it would defend the key benchmark yield from rising above its target."

Kanno added the yen's weakness would continue as US Federal Reserve would become increasingly hawkish.

The yen weakened sharply to two-decade lows against the US dollar this month amid a relentless widening of Japanese and US yield spreads.

Makoto Suzuki, senior bond strategist at Okasan Securities, noted that the BOJ's extra push to lower yields came amid several factos that could slow the economy, influding Covid-19 lockdowns in China.

The BoJ had also offered to buy unlimited amounts of 10-year bonds at 0.25 per cent in February and made 4 consecutive days of offers in March. REUTERS