BOJ’s Latent Losses on JGB Holdings Log Record

Tokyo, Nov. 27 (Jiji Press)–The Bank of Japan said Wednesday that unrealized losses on its holdings of Japanese government bonds widened to a record 32,825.8 billion yen at the end of September. The latent losses expanded from 28,624.6 billion yen six months before because of a decline in the assessed value of the central bank’s JGB holdings as the BOJ’s efforts to normalize its monetary policy helped to push up yields. Following the BOJ’s decision to raise its policy interest rate from 0.25 pct to 0.5 pct in January, its interest payments on current account deposits from private financial institutions surged to 1,268.3 billion yen. These interest payments exceeded the BOJ’s interest income from its JGB holdings, which stood at 1,182 billion yen, resulting in a loss for first time since comparable data became available in October 2008. A BOJ official said the expansion of latent losses on its JGB holdings “would not hinder its ability to manage policy.” However, there are concerns that the worsening financial conditions of the central bank could damage confidence in the yen. The BOJ’s holdings of exchange-traded funds had latent gains of a record 46,040.5 billion yen, up from 32,871.2 billion yen at the end of March, thanks to a rise in stock prices. As of the end of September, the BOJ’s assets totaled 695,781.9 billion yen, down 7.6 pct from a year before, due to a decrease in its JGB holdings and loans. The central bank’s surplus funds, equivalent to the net profits of private companies, decreased 6.6 pct to 1,714.8 billion yen. END [Copyright The Jiji Press, Ltd.]