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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: Jim Willie CB who wrote (2676)	11/28/2003 2:28:38 PM
From: russwinter	Read Replies (4) of 110194

Surprise, surprise: Bank of Japan suffers first loss in decades By Charles Batchelor in London and Barney Jopson in Tokyo Published: November 28 2003 4:00 Japan's central bank made its first operating loss in 32 years in the six months to September 30 because lower bond prices reduced the value of its holdings in government securities. The Bank of Japan made an overall net loss of Y112.7bn (£600m) in the first half compared with a profit of Y288.5bn in the same period last year The bank said it would not be making a contribution to the government coffers this year. Last year it paid Y594bn - just over 1 per cent of government tax revenues. The move will be a blow to the government of Junichiro Koizumi, the prime minister, which is attempting to reduce bond sales and cut the national debt. The loss raises questions about the BoJ's policy of accumulating sizeable holdings of domestic government bonds and will hit the government budget. The bank reported a loss of Y793.8bn on the sale and redemption of domestic government securities and a loss of Y760bn from the devaluation of government securities. It also suffered losses on its large holdings of foreign government - predominantly US Treasury - bonds. The BoJ, which has been intervening heavily in the foreign exchange markets to stem the appreciation of the yen, has been the biggest foreign buyer of US Treasury and quasi-sovereign agency bonds. It has ploughed the bulk of the dollars gained through currency interventions into US government debt, whose performance has been weak and whose value has been eroded as the dollar has fallen.

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