EconomyA Record Number Of Foreign Investors Buy Japanese Bonds

2542 min

Foreign investors bought Japanese bonds for 1.72 trillion yen in the first week of December. According to the Ministry of Finance data dating back to January 2005, this is the highest ever. The tendency of such bulk purchase may complicate the yield curve control of the Bank of Japan.

It is a natural flow for foreigners to buy Japanese government bonds in a risk-off environment, said Steven Inness, Oanda Asia Pacific Regional Trading Officer. “When the market is in a risk avoidance mood, safety assets like yen are bought and Japanese bonds are also preferred,” he said.

Ten-year Japanese government bond yields were 0.035% on the 10th and became low for the first time in four months. However, if the Bank of Japan does not reduce the yield much, the observation that it is trying to cancel the super monetary easing mode emerges and the yen may rise. This is undesirable for the Bank of Japan.

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