The Bank of Japan stunned financial markets Friday by adopting negative interest rates as a fresh stimulus step, with the key long-term rate dropping to a record low.
The additional monetary easing by the central bank also weakened the yen against other major currencies, while lifting
Tokyo
stocks following recent sluggishness amid concern over the global economic outlook due to a slowdown in
China
as well as the collapse of crude oil prices.
The yield on the benchmark 10-year Japanese government bond fell to a record-low 0.090 percent at one point. The main yardstick of long-term interest rates dropped below the 0.1 percent line for the first time on record.
The No. 341, 0.3 percent issue drew buying following the BOJ's announcement after a two-day policy meeting that it will cut the interest rate on part of the deposits held by financial institutions at the central bank into negative territory, in a bid to push the institutions to increase lending and investment.
The
U.S.
dollar briefly rose to the lower
121 yen level from the mid-118 yen range as the
BOJ announcement at around 12:30 p.m. added to expectations of wider interest rate differentials between the
U.S.
and Japanese economies. The
U.S.
Federal Reserve raised rates in December.
The Nikkei stock index gained more than 500 points before losing steam. At 2 p.m., the index stood at 17,278.12, up 236.67 points, or 1.39 percent, from Thursday as the weaker yen gave a boost to exporters.
==Kyodo
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Source: Equities.com News
(January 28, 2016 - 3:14 PM EST)
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