TOKYO Reuters The Bank of Japan has decided to tap 6 billion in cash from a government account in a rare arrangement to ensure it has enough ammunition to combat any market disruptions caused by a recent resurgence in coronavirus infections.
Under the arrangement announced on Wednesday, the central bank will buy dollar cash from the Ministry of Finance any time through to the end of March next year at the prevailing market exchange rate at the time.
It will be the first time the BOJ will buy dollars outright from the MOF, underscoring the central banks caution over the risk of renewed dollarfunding strains heading into the end of the year.
The move is in preparation for smoother execution of the Bank of Japans operations, such as international financial cooperation and foreign currency supply to financial institutions, the central bank said in the statement.
The decision will likely give the BOJ flexibility to address any dollar shortages that domestic financial institutions could face ahead of the yearend and the March closure of Japans fiscal year.
Japanese financial institutions have repeatedly faced dollar funding strains in times of market stress, though the BOJs dollarfunding operations have drawn little demand in recent months as market conditions remained stable.
The BOJs move comes ahead of its twoday rate review that concludes on Friday, when it is expected to extend the March 2021 deadlines of a range of measures aimed at easing corporate funding…