Bank of Japan's unrealized loss on govt bonds widens to $68bn

TOKYO: The Bank of Japan's (BOJ) unrealised losses on its holdings of government bonds amounted to about 8.8 trillion yen ($68 billion) at the end of December last year, the central bank's governor Haruhiko Kuroda has said.

During a parliamentary session, Kuroda said that the book value of BOJ's government bond holdings at the end of December 2022 reached 564.1 trillion yen, while their market value was 555.3 trillion yen, reports Xinhua news agency.

The unrealized losses have increased roughly 10 times within three months compared to the end of September when it stood at 874.9 billion yen, as government bond yields jumped on expectations that the BOJ would tighten its monetary policy.

At its policy meeting in December, the BOJ announced a shift in its ultra-loose monetary policy, raising the yield on the 10-year Japanese government bond as high as 0.5 per cent from a previous cap of 0.25 per cent.

Following the move, the BOJ has been stepping up bond buying to prevent the 10-year yield from breaching its newly-set 0.5 per cent ceiling.

The unrealized losses will have no immediate impact as the BOJ has adopted a policy of holding government bonds until maturity, Kuroda said, adding that they are however paying close attention to the central bank's fiscal health.

Experts here warned that if unrealized losses increase and the market begins to feel uneasy about the BOJ's financial condition, interest rates and exchange rates could be affected.