Japan: Largest inflow since mid-December – Danske Bank

Portfolio flows out Japan have been an important driver behind JPY weakness in the recent year, and today’s flow data from the Ministry of Finance in Japan show that Japanese investors were net sellers of foreign bonds in the week ending 9 February and all in all, a net inflow into Japan of 630.2bn was recorded last week – the largest inflow since mid-December, explains Senior Analyst, Piet P.H. Christiansen at Danske Bank.

Key Quotes

“USD/JPY broke below 106 this morning, and we think a continued reversal of portfolio back into Japan (driven by higher interest rate volatility in the US and Europe) in combination with fiscal year-end in Japan and stretched short JPY positioning is likely to weigh further on USD/JPY in coming months.”