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Bond traders measure Bank of Japan tolerance on new flexible range

Central bank holds fire even as 10-year JGB yields hit 0.12%

The yield on 10-year Japanese government bonds reached its highest point in a year and a half Wednesday as the Bank of Japan loosened its grip on interest rates.

TOKYO -- Japanese long-term bond yields ended Wednesday at their highest level in a year and a half as investors test the limit of the Bank of Japan's new found tolerance for rising long-term rates.

The central bank decided Tuesday to let long rates move in a wider band than the previous effective limit at 0.1% above or below its target of around zero. Gov. Haruhiko Kuroda said he sees the range doubling, which market players understand to mean that rates can rise as high as 0.2%.

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