up until mid october, the target bond was the april 2023 maturity. now the bond with maturity closest to 3 years is the april 2024. since early november, we have purchased $ 5 billion of the april 2024 bond to meet the objective of maintaining the 3 - year yield around 10 basis points. in november, the board announced a quantity bond purchase program that is complementary to the 3 - year yield target. why did the board decide to do this? longer - term australian government bond yields were higher than those in other advanced countries. this provided some evidence that the size of central bank bond purchase programs was affecting longer - term yields beyond the anchoring effect of the bank's 3 - year yield target. this in turn was contributing to a higher exchange rate. why didn't the board extend the yield target to a longer horizon? first, the yield target reinforces the board's forward guidance on the cash rate. three years is a reasonable horizon over which we have https : / / www. rba. gov. au / speeches / 2020 / sp - dg - 2020 - 11 - 24. html 10 / 14 11 / 24 / 2020 monetary policy in 2020 | speeches | rba some confidence about the economic outlook. beyond that, the economic outlook is considerably less certain and with it, our confidence about the settings of monetary policy. second, further out along the yield curve other factors also start to have a greater influence, particularly global developments. the recent volatility in longer - term bond yields resulting from news about potential vaccines is a case in point. what has been the impact of the expectation and announcement of the november package? recent movements in bond yields and the exchange rate provide some evidence. since mid september, there were increased market expectations of a further decline in the cash rate, es rate and the 3 - year bond yield target. there were also expectations that the bank would announce a quantity target for bond purchases. as a result, there was a decline in yields at the front end of the curve. there was also a decline in longer - term yields that was larger than the decline in shorter - term yields. the spread between australian government bonds and those of other advanced economies narrowed ( graph 8 ). this provides some evidence that the quantity of bond purchases has an influence above and beyond the price, particularly in terms of net demand, that is how much the central bank buys relative to issuance. finally, the spread of semis to ags also

declined. between then and early november, the exchange rate depreciated by around 5 per cent in tradeweighted terms and against the us dollar. it is reasonable to attribute the bulk of this depreciation to the growing expectation of the package announced in november. longer - term yields have risen a little since the november board meeting as has the exchange rate, largely due to the news about vaccines. but i would argue they are both lower than they would be absent the november policy package. https : / / www. rba. gov. au / speeches / 2020 / sp - dg - 2020 - 11 - 24. html 11 / 14 11 / 24 / 2020 monetary policy in 2020 | speeches | rba graph 8 10 - year australian government bond spreads australian yield minus select international bond yields bps bps uk canada nz us - 50 - 50 - 100 - 100 j f m a m j j a s o n d sources : bloomberg ; yieldbroker let me remind you briefly about how the bond purchases occur. the bond purchase program comprises $ 80 billion of ags and $ 20 billion of semis. any purchases to maintain the 3 - year yield target will be in addition to this. the bank buys bonds in the secondary market. we announce our intentions at 11. 15 am on mondays and thursdays for the australian government bond auctions, both for the 3 - year target and the ags bond purchase program ( though this does not completely preclude purchasing bonds for the 3 - year target on other days if necessary ), and on wednesdays for the semis bond purchase program. the bond purchase program comprises bonds beyond the 3 - year yield target up to the longest maturity in the 10 - year futures basket. we alternate purchases between the shorter and longer end of that maturity spectrum. the semis are purchased across 3 auctions with the aim of buying broadly in line with the size of their respective bond programs. in the afternoon, we take bids in a 5 - minute window on the auction platform. we accept the bids that are cheapest relative to the mid - market price for the relevant bond. this determines the final composition of the bonds we purchase each auction, with the caveat that for the states we aim to achieve an overall allocation across the purchase program broadly consistent with the size of their bond programs. we aim to exclude bond lines from the weekly auctions that are being tapped in the same week or are recently issued new bonds. the results of