By Yumi Ikeda and Nate Hosoda
Jan. 30 (Bloomberg) -- Japanese investors are bringing back money from abroad as a “once-in-a-century” financial crisis prompts them to buy the yen and domestic government bonds, said Hajime Takada, chief strategist at Mizuho Securities Co.
The CHART OF THE DAY shows Japan’s 10-year yield dropped from a three-month high of 1.63 percent on Oct. 14 to 1.265 percent yesterday. On Jan. 21, the yen climbed to the highest per dollar since July 1995 and the strongest in almost seven years versus the euro.
Japanese investors’ net sales of foreign bonds totaled 236.8 billion yen ($2.6 billion) in December, the first time since August that selling exceeded buying, according to a Jan. 13 report by the Ministry of Finance in Tokyo.
“People may easily think it’s time to buy Japan’s government bonds as we are in a once-in-a-century crisis,” said Takada, who works at a unit of Japan’s second-largest banking group. Non-Japanese investors from overseas are also buying yen assets as the currency rises, Takada said.
The yen climbed to 87.13 against the dollar on Jan. 21 and advanced to 112.12 per euro. Japan’s currency traded at 90.09 per dollar and 116.62 per euro as of 7:55 a.m. in Tokyo.
Should the yen extend gains, threatening exporters’ profits “the Bank of Japan may come under pressure to cut interest rates again and even return to a zero interest-rate policy by next month,” Takada said. The central bank cut the overnight call target to 0.1 percent from 0.3 percent on Dec. 19.
To contact the reporter on this story: Yumi Ikeda in Tokyo at yikeda4@bloomberg.net; Nate Hosoda in Tokyo at nhosoda@bloomberg.net
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