Japanese Investors Buy ¥5 Trillion in Foreign Assets as Yen Intervention Revives Carry Trade
Updated
Updated · CNBC · Aug 20
Japanese Investors Buy ¥5 Trillion in Foreign Assets as Yen Intervention Revives Carry Trade
3 articles · Updated · CNBC · Aug 20
Summary
More than ¥5 trillion of net buying in foreign equities and long-term bonds over the two weeks to Aug. 15 marked a sharp reversal from more than ¥300 billion of net selling in the prior two weeks.
The shift followed last month's joint U.S.-Japan intervention, which briefly lifted the yen from about 164 per dollar to 155 and let investors buy overseas assets at better exchange rates.
That rebound faded quickly, with the yen weakening back toward 159 as Japan's low funding costs and a roughly 1.8-percentage-point U.S.-Japan 10-year yield gap kept carry trades attractive.
Institutional and retail investors used the stronger yen to add non-yen positions, especially higher-yielding U.S. bills and bonds, while some currency traders rebuilt bearish dollar-yen bets above 157.
Speculative pressure has eased from late June extremes—CFTC data show leveraged funds cut net short yen positions to 59,526 from nearly 138,000—but analysts say intervention addressed the symptom, not the rate-gap driver.