Japanese investors dump foreign bonds in return to domestic market

Mounting currency costs prompt shift that could push down Japan long rates

20230125N dollar-yen

The rise in currency hedging costs means Japanese investors currently stand to lose money from investing in 10-year U.S. Treasurys. © Reuters

TOSHIHIRO SATO, AKIRA INUJIMA and KOSUKE IGUCHI, Nikkei staff writers

TOKYO -- Japanese investors dumped foreign bonds at a record pace in 2022, ending a yearslong buying spree as increased currency hedging costs eat into returns from overseas assets.

The investors, including insurers and banks, sold a net 21.74 trillion yen ($168 billion) worth of foreign medium- and long-term bonds last year, the Finance Ministry reports.

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