TOKYO -- Foreign investors for the first time have become bigger holders of Japanese government bonds than Japanese banks. The ratio of short-term JGBs, known as Treasury Discount Bills, held by foreign investors has also risen to an all-time high.
In trading environments favorable to holders of dollars, foreign investors raise yen inexpensively and buy JGBs. But since foreign investors often invest in JGBs for the sake of quick returns, they could also withdraw their funds in chorus in times of emergency. Price fluctuation risks therefore are gradually building in the JGB market.
