The yen hit a four-year-low of 101 against the U.S. dollar on Friday, extending losses beyond the key 100-mark amid signs that Japan’s bid to reflate its economy is finally leading domestic investors to look for higher yields elsewhere.
According to data from Japan’s Ministry of Finance, Japanese investors became net buyers of foreign bonds in the last two weeks, buying 309.9 billion yen ($3.1 billion) in foreign funds in the week to May 4. They purchased 204.4 billion yen worth of foreign bonds in the previous week.
While the data is only for two weeks, if this trend of capital flight continues, the yen could see more downward pressure in the months ahead, say analysts.
That capital outflows data pushed the yen to a record low in early Asian trade after it broke through the psychologically-key 100 barrier overnight on strong weekly U.S. jobless claims numbers.