JPY: MoF Data Signals Second Consecutive Repatriation: Whats' Next? - BNPP

Japanese Ministry of Finance weekly portfolio flow data showed Japanese investors were net sellers of foreign assets for the second consecutive week.

Japanese investors sold JPY 607.6bn and JPY 449.3bn of foreign bonds and stocks respectively, pushing the 4-week sum of purchases into net repatriation territory (see chart). Widening USD-JPY front-end rate differentials have made hedging of USD risk increasingly expensive for JPY-based investors. The data suggests that rather than scaling back the FX hedging of new flows, Japanese investors are choosing to keep their money at home.

We continue to look for a moderate recovery in USDJPY, driven principally by higher US yields as the market prepares for a Fed hike.

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