The Bank of Japan is seeking to uphold its monetary policy without giving the impression it is weakening the yen before Prime Minister Shinzo Abe meets with U.S. President Donald Trump this week, according to Pacific Investment Management Co.
With Trump criticizing Japan for devaluing its currency last week, investors began to question the BOJ's commitment to its easing policy. BOJ had to spend ¥1.17 trillion ($10.5 billion) buying back bonds on Friday, as it sought to bring the surging 10-year yield down closer to its stated aim of around zero percent.
"They are in a tricky spot," said Andrew Balls, chief investment officer of global fixed income at Pimco. "And they don't want to get too far away from the yield target. At the same time there's the Trump angle."