Japan posts 2.56 trln yen investment fund outflow in Oct -
Wednesday, November 10, 2004 2:26:58 AM
afxpress.com
TOKYO (AFX-ASIA) - Japan posted an investment fund outflow of 2.56 trln yen in October, as Japanese net purchases of foreign bonds soared to a 17-month high, data released by the Ministry of Finance (MoF) showed
Japanese net purchases of foreign bonds soared to 3.37 trln yen in October, the highest figure since May 2003 and 29 times the figure for September
In September, Japanese were net buyers of 117.7 bln yen of foreign bonds. Japanese are major buyers of US government bonds, and their investment behavior is watched closely for evidence of whether US Treasury prices and interest rates are likely to rise or fall, depending on the willingness of foreign investors to keep financing a large portion of the soaring US budget deficit
Such a large outflow of investment funds from Japan could ease pressure on the yen to appreciate against the US dollar
The yen has appreciated sharply against the dollar over the past month, gaining about 5 pct in value and strengthening to 105 yen -- a level sparking concern about renewed Japanese government intervention in the currency market
Daisuke Uno, market analyst at Sumitomo Mitsui Banking Corp, said there may be a time lag between investment activity and foreign exchange rate changes
"In addition, the trend of the yen-dollar exchange rate is mostly forged through the US monetary policy, rather than the demand/supply balance," said Uno. "The demand/supply balance should lead only to temporal fluctuations in the foreign exchange market." The market analyst also suggested another possibility -- that the destination of the investment outflow was not the US but the euro area, as the euro was relatively higher against the yen during October. |
