TOKYO, June 28 (Reuters) - Japan's Ministry of Finance floated a plan on Wednesday to increase the size of short-term Japanese government bond issue through so-called liquidity-enhancing auctions to ease their shortage, a senior ministry official said.
The plan was proposed to a gathering of JGB primary dealers, the official said, adding the ministry will make a final decision on the plan after sounding out investors' opinion in a meeting on Thursday.
The MOF regularly conducts liquidity-enhancing JGB auctions, in which it re-offers existing JGB issues. During the current April-June quarter, it sold 200 billion yen ($1.78 billion) of JGBs with one to five years left to maturity twice.
Under the new plan, the ministry will increase the issue amount to 300 billion yen each time from the next quarter.
Short-term JGBs are scarce in the market due to the Bank of Japan's massive buying and strong demand from foreign investors.
Although their yields are negative, short-term JGBs have decent yields when swapped to dollars. ($1 = 112.14 yen) (Reporting by Takaya Yamaguchi, writing by Hideyuki Sano; Editing by Gopakumar Warrier)