Bank of Japan's ETF Asset Purchases Zero Last Month... First Since Governor Kuroda's Inauguration

Haruhiko Kuroda, Governor of the Bank of Japan
Photo by Reuters-Yonhap News

[Asia Economy Reporter Park Byung-hee] The Bank of Japan (BOJ), Japan's central bank, did not purchase any assets using exchange-traded funds (ETFs) last month, Yomiuri Shimbun reported on the 1st.

The newspaper stated that this is the first time since BOJ Governor Haruhiko Kuroda launched large-scale monetary easing policies in April 2013 that the BOJ did not buy ETFs on a monthly basis. The BOJ began purchasing ETFs as part of monetary easing from December 2010. After Governor Kuroda took office on March 20, 2013, the purchase scale was expanded to achieve the 2% inflation target, and as of the end of last month, the BOJ's ETF holdings reached 36 trillion yen (approximately 364.6 trillion won) on a book value basis.

In the monetary policy meeting held in March, the BOJ signaled a reduction in asset purchases. The statement released after the meeting removed the purchase principle that the ETF holdings would "increase at an annual pace equivalent to about 6 trillion yen."

Last March, amid growing concerns over the impact of COVID-19, the BOJ maintained the "6 trillion yen" principle but added a policy to "actively purchase with an upper limit of an annual increase in holdings equivalent to 12 trillion yen for the time being." However, after this year's March meeting, the phrase "actively purchase" was changed to "purchase as needed" in the guideline of "actively purchase with an upper limit of an annual increase in holdings equivalent to 12 trillion yen for the time being."

In April, the BOJ made only one ETF purchase, amounting to 70.1 billion yen.

Hiroshi Ugai, Chief Economist at JP Morgan Securities, diagnosed that "the stance of refraining from purchases is stronger than expected."

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