The Bank of Japan failed to attract enough offers Wednesday in two rounds of short-term bill-buying aimed at injecting liquidity into the money market.

At 10:10 a.m., the central bank notified the money market it would purchase 800 billion yen in short-term government bills through resale agreements. However, it received offers to sell only 716.6 billion yen, BOJ officials said.

It was the first time the BOJ has failed to inject a planned amount of liquidity into the money market since March, when it adopted a strategy of quantitative easing to push short-term interest rates to virtually zero.

At 12:10 p.m. the same day, the BOJ notified the market of another 800 billion yen short-term bill-buying operation through resale agreements. The offers again fell short of the targeted amount, coming to 702.9 billion yen.

A BOJ official said the failure stemmed from the scarcity of market participants in the middle of the Golden Week holiday period as well as waning desire among banks to raise funds.

Japanese markets are closed today and Friday for the second half of the Golden Week holidays.

A BOJ official said that if operations in short-term bills continue to fail, the bank may consider increasing the amount of long-term government bonds it buys outright in operations.

Resignation rumors

Chief Cabinet Secretary Yasuo Fukuda said Wednesday he has not been informed about whether Bank of Japan Gov. Masaru Hayami intends to resign.

“I am aware of such reports, but I have not heard that directly from BOJ Gov. Hayami,” the top government spokesman said at a news conference.

Fukuda said he has heard nothing regarding a possible meeting between Hayami and Prime Minister Junichiro Koizumi, adding that reports of his impending resignation could turn out to be media speculation.

Hayami, 76, said at a news conference in Washington on Saturday that he intends to stay on as central bank head as long as his health allows, countering reports last week that he intends to resign this month.

In Tokyo, however, sources close to Hayami said Friday he plans to resign once he returns from Washington, and that he has already conveyed his intention to the prime minister’s office. His five-year term would otherwise end March 19, 2003.

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