BoJ Boosts JGB Purchase, BoE Minutes and FOMC Next

The Japanese yen remains soft in tight range after Bank of Japan left overnight lending rate unchanged at 0.1%. At the same time, BoJ boosted purchase of Japanese Government Bonds (JGBs) up from ¥1.4T to ¥1.8T per month. BoJ said in the statment that markets will "remain under stress" in the new fiscal year and "continued provision of substantial liquidity is required to ensure stability in financial markets." BoJ has also announced yesterday it is setting up a ¥1T fund to give subordinated loans to banks. JGBs trade higher after the announcement pushing yield down slightly and should make it easiser for the government to fund the planned deficits. But markets are increasingly worried that BoJ is running out of new ideas to revive the economy of Japan, whieh appears to be much more affected by the current financial crisis than other developed countries. Nikkei edged higher by 23 pts to 7972 today but failed to sustain above 8000 psychological level after breaching briefly.