Japanese repatriation stalls as yen trades near 159 per dollar

  • Japanese investors have begun repatriating overseas assets but remain cautious about domestic bonds.
  • Yen positioning turned into a $9.7 billion net long during September’s first two weeks.
  • Ten-year JGB yields exceeded 3% after rising two percentage points in under two years.

Japanese investors have begun bringing money home, but uncertainty over where bond yields will peak and how far the Bank of Japan must raise interest rates is delaying a broader repatriation of overseas assets. The central bank’s rate hike last week, pledges to address inflation and a reported foreign-exchange market rate check appear to have discouraged another wave of speculative bets against the yen. However, two dovish dissenting votes at the meeting and a further bond selloff have left major investors reluctant to commit heavily to Japanese government bonds while yields continue climbing. The yen has surrendered most of its early-September gains and traded near 159 per dollar on Friday, close to the 157 median six-month forecast from analysts polled by Reuters earlier this month. It is down about 1% this year after reaching a nearly four-decade low just below 164 per dollar in July. Speculative yen positioning shifted from a deep net short to a net long of $9.7 billion in the first two weeks of September, the largest long position since July 2025. Ten-year JGB yields have risen two percentage points in less than two years to above 3%, while Japanese investors bought 4.8 trillion yen of sovereign debt last month. HSBC estimates Japanese banks have sold about $70 billion of foreign bonds this year, compared with $35 billion of purchases last year. Analysts say a larger shift may depend on evidence that Japanese yields have peaked, including any change by the $1.8 trillion Government Pension Investment Fund. Rising U.S. yields and expectations of further Federal Reserve tightening could continue to limit the yen’s gains.

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Japanese repatriation stalls as yen trades near 159 per dollar - CoinPost Terminal