MonexGroup News & Analysis

Yen Intervention Sparks 5 Trillion Yen in Foreign Asset Purchases

Japanese investors net bought over 5 trillion yen of foreign equities and long-term bonds in the two weeks ending August 15, 2023, a significant increase compared to over 300 billion yen in net selling in the prior two weeks. This activity follows a historic yen intervention, with the yen strengthening from around 164 per dollar to roughly 155 before weakening to about 159. Experts note that as long as borrowing costs in Japan remain low compared to returns overseas, the carry trade will continue. This is relevant for ordinary investors as it indicates a shift in investment strategies towards overseas assets.