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Currency hedging costs in bonds to stay high: Sumitomo Life CEO

Insurer sees no narrowing of Japan-U.S. interest rate gap this year

Sumitomo Life Insurance CEO Yukinori Takada. (Photo by Hiroshi Endo)

TOKYO -- Japan's Sumitomo Life Insurance expects currency hedging costs for foreign bond investments to remain elevated based on the interest rate outlook, putting a drag on earnings in the next three years, CEO Yukinori Takada said.

Life insurers are among Japan's biggest institutional investors. Hedging costs eat into the higher yields that Sumitomo Life and its peers sought in U.S. government and corporate debt.

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