High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. http://www.ft.com/cms/s/0/27ead1a6-a807-11e2-b031-00144feabdc0.html#ixzz2Qo2xBKUv
The Japanese yen strengthened after figures showed that domestic Japanese investors were continuing to repatriate money from overseas, disappointing those expecting Japan’s currency to be hit by a new wave of selling.
Data from Japan’s Ministry of Finance showed that domestic residents continued to be net sellers of overseas assets in the first full week after the Bank of Japan announced its ramped up bond-buying programme at the start of April.
High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. http://www.ft.com/cms/s/0/27ead1a6-a807-11e2-b031-00144feabdc0.html#ixzz2Qo2y8fh0
Analysts and investors expect domestic Japanese investors to start moving money overseas in search of income if the BoJ’s easing plans cause domestic bond yields to fall. So far, Japanese investors have preferred to take advantage of the weaker yen to bring overseas assets back home.
However, the figures did indicate the pace of repatriation had slowed, with net sales of foreign securities at Y0.55tn, down from Y1.06tn the week before
“The data suggest that while markets have been anticipating Japanese investors to increasingly move overseas post-BoJ, the evidence is not quite there at the moment,” said analysts at BNP Paribas.
“Still, in our view the BoJ's aggressive buying of JGBs will over time lead to the ‘crowding out’ of Japanese domestic investors and increased capital outflows from Japan.”
The dollar hit a daily low of Y97.63 and was later 0.1 per cent weaker at Y98.21.
The euro was higher against the dollar as Italian politicians cast votes to elect a new president, raising hopes of more political stability in the country, which has been without clear leadership since inconclusive elections in February.
“If the new Italian president is elected today, this could encourage potential resolution of the political impasse and help the single currency,” said analysts at Citigroup.
The single currency rose 0.1 per cent to $1.3040.
The UK pound remained at its weakest level in two weeks following steep falls the previous day after figures showed a rise in unemployment and minutes revealed a continued threat of further monetary easing from the Bank of England.
But sterling clawed back earlier losses after UK retail sales in March did not fall as much as expected, dipping 0.5 per cent on an annual basis against expectations of a 0.6 per cent fall. In February, retail sales grew 2.5 per cent from the previous year.
Sterling was later flat against the dollar at $1.5238.
