TOKYO, June 14 (Reuters) – The Bank of Japan stepped up bond buying on Tuesday as its yield ceiling came under renewed pressure from rising global interest rates, underscoring its difficulty in remaining an outlier in a global wave of monetary tightening.

The central bank’s determination to keep yields low helped push the yen to a 24-year low against the dollar as investors focused on the spread between Japan’s ultra-low interest rates and expectations of aggressive hikes from the US Federal Reserve.

The BOJ widened its bond buying on Tuesday and offered to increase a series of full-curve buying on Wednesday, to bring the yield on 10-year Japanese government bonds (JGB) back to its ceiling of 0.25. %.

The announcements had mixed effects by suppressing yields on bonds of other maturities. Two-year and 30-year yields fell, but the five-year yield jumped to a level not seen since 2015.

Some super-long maturities were also sold off, on speculation that the BOJ might eventually adjust its yield targets, distorting the shape of the yield curve.

“The bond market appears to price in the possibility of a yield curve control collapse,” Jun Ishii, chief bond strategist at Mitsubishi UFJ Morgan Stanley Securities, wrote in a research note.

Finance Minister Shunichi Suzuki on Tuesday reiterated his concerns over the yen’s recent rapid fall, underscoring the dilemma Tokyo faces as it pursues two conflicting goals: to keep interest rates low without weakening the yen further.

“A rapid weakening of the yen has been seen recently in the forex market and I am concerned,” Suzuki told a news conference. “We will be watching currency market moves and their impact on the economy and prices carefully with an even greater sense of urgency.”

The central bank said in a statement: “We will make changes to JGB’s auction schedule and outright purchase amounts as necessary, taking into account market conditions.”

The yen last traded at 134.58 to the dollar on Tuesday, after hitting a 24-year low of 135.22 on Monday.

The weak yen has become a headache for Japanese policymakers as it pushes up the already rising prices of imported fuel and raw materials, driving up the cost of living for households.

The government and the central bank issued a rare joint statement on Friday expressing concern over the sharp drop in the yen. It was the strongest warning yet that Tokyo might step in to support the currency. Read more

However, such a charade did little to reverse a broad and strong dollar trend.

BOJ Governor Haruhiko Kuroda reiterated the bank’s determination to keep interest rates extremely low to support an economy that has yet to fully recover from the damage caused by the pandemic. Read more

“There is no way the central bank will raise interest rates to support the yen,” said Noriatsu Tanji, chief bond strategist at Mizuho Securities. “Compared to other countries, Japan has inflation that is still too low to worry about.”

Analysts expect the BOJ to keep interest rates ultra-low at a two-day policy meeting that ends Friday. Read more

Reporting by Tetsushi Kajimoto and Daniel Leussink; Written by Leika Kihara; Editing by Shri Navaratnam and Bradley Perrett

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