ICYMI: Bank of Japan has boosted its provisions for JGB losses, braced for increased charges

I posted this from the Nikkei earlier, a reminder as we await the opening of Japanese markets for the week.

Bank of Japan info comes via Japanese media, Nikkei (gated):

• The Bank of Japan has set aside the maximum provisions for losses on bond transactions
• a sign of how the central bank is preparing for rising interest rates
• For fiscal 2024, the BOJ raised the level of provisions to 100% for the first time, Nikkei has learned
• the provisions are funded with income from bond and other transactions
• provisions … target has usually been 50% of income … pre- fiscal 2024, the BOJ had gone as high as 95% in fiscal 2018 … in fiscal 2024, the BOJ increased provisions by 472.7 billion yen ($3.28 billion at current rates), compared with a 922.7 billion yen increase in fiscal 2023

At the margin higher Bank of Japan rates are supportive for yen. The prospect of higher rates in Japan sent the yen higher in July/Aug/Sep 2024 and violently unwound some yen carry trade, impacting global markets.

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