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Japan Investors Fuel Capital Outflow

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.

via CNBC [1]

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Alfonso Esparza

Alfonso Esparza [6]

Senior Currency Analyst at Market Pulse [7]
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza
Alfonso Esparza

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