(Bloomberg) -- Bond traders are on edge heading into the Bank of Japan meeting this week for any hints of change to its policy of purchasing the country’s sovereign debt. 

After a historic shift away from negative interest rates in March, the central bank is likely to hold pat on its benchmark rates at its April 25-26 gathering, according to a Bloomberg survey. Yet there’s still a chance of a signal from the BOJ on its Japanese government bond purchases, which would be seen as hawkish for debt markets and may also offer support to the yen.

The focus is on whether the BOJ’s policy statement will continue to include wording about buying JGBs, said Naomi Muguruma, chief fixed-income strategist in Tokyo at Mitsubishi UFJ Morgan Stanley Securities Co. “If this is removed, the market will brace itself for a signal about the start of quantitative tightening in the near future,” she said.

The BOJ “could give some kind of hint about the outlook for the JGB purchase policy, taking into account JGB market trends,” Ataru Okumura, senior rates strategist at SMBC Nikko Securities Inc. said in a report Friday. Any adjustment to buying may have “a major impact on the market” given the lack of consensus on the matter among participants, he said.

In its March 19 policy decision, the BOJ said it would continue with roughly the same amount of JGB buying as before. A footnote in its announcement said that current monthly purchases of sovereign bonds are about ¥6 trillion ($39 billion). Any change or omission of these words could put upward pressure on long-term interest rates.

Still, the BOJ has other opportunities outside of the policy meeting to lower its bond purchases or to signal changes. It conducts buying operations five times a month, announces its monthly purchase plans at the end of each month, and once a quarter sets out a three-month schedule.

Anything that indicates a reduction in bond purchases by the BOJ would bring upward pressure on Japanese rates and in turn offer support to the yen, which is trading near a 34-year low against the dollar. 

While Japan has made repeated warnings that it may step into the currency market to prop up the yen, many traders consider unilateral intervention by the finance ministry as a strategy that would have only limited influence.

History suggests that policymakers could try to increase their impact by combining direct currency intervention with a change to bond purchases.  

When Toshihiko Fukui took the helm of the BOJ in 2003, during a period of yen appreciation, he expanded quantitative easing. And at around the same time, the finance ministry intervened to sell the yen.

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