Forex Flash: Early signs of acceleration of Japanese FX risk taking - Nomura

FXstreet.com (Barcelona) - Nomura strategist, Yujiro Goto notes that flow data released today suggests signs of acceleration of Japanese FX risk taking, but the magnitude is still not huge compared with elevated expectation after the BOJ easing.

He adds that Japanese investors were net sellers of foreign securities in April for the sixth month in a row and their selling remained at a high level to the tune of JPY2.4trn (USD24bn), but weekly data has already suggested Japanese investors have been selling foreign securities in April. Thus, he sees that large selling is not surprising. Further, he adds that most of liquidation was by banks and both life insurance companies and toshin companies were net buyers of foreign securities. He writes, “In fact, Japanese selling of foreign securities slowed to JPY140bn (USD1.4bn) from JPY2.3trn (USD23bn) after excluding banks. Banks' investment in foreign bonds is usually FX neutral and thus, the sharp recovery of Japanese investment excluding banks is positive for USDJPY, in our view.”