Latest news with #yen
Japan Times
3 days ago
- Business
- Japan Times
Japanese life insurers cut bullish yen hedges to 14-year low
Japanese life insurers cut protection for their foreign assets against a stronger yen to a fresh 14-year low, signaling subdued expectations of a sustained rally in the nation's currency. Nine of Japan's biggest life insurers collectively lowered bullish yen wagers tied to their foreign investment holdings to 44.4% at the end of the fiscal half in March, compared with 45.2% six months earlier, according to an analysis of their earnings reports. While U.S. President Donald Trump's administration's unpredictable policymaking has stoked foreign exchange market volatility, that wasn't enough to stop a three-year decline in yen hedging. The Bank of Japan's policy interest rate is still 3 percentage points lower than the nation's inflation rate, with the next potential hike seen further delayed. The continued decline in hedging suggests "life insurers see a lower likelihood of the yen showing the kind of strength it did in the past, and feel a need to hold unhedged overseas bonds to maintain exposure to foreign exchange risks,' said Ayako Sera, a market strategist at Sumitomo Mitsui Trust Bank in Tokyo. "The yen's real interest rates are just too low.' Still-high currency hedging costs are also weighing on life insurers' demand for overseas debt. Japan's 10-year notes yield more than 150 basis points on a compounded basis, much more than counterparts in the United States, United Kingdom, Germany and Australia once foreign exchange protection costs are taken into account, data shows. Life insurers offloaded a net ¥756 billion ($5.3 billion) worth of foreign bonds in the six months through March 31, Finance Ministry data showed. That marks the seventh consecutive such period of sales. Insurers dumped a net ¥21.2 billion of overseas stocks in the October-March period after buying ¥1.06 trillion in the six months through Sept. 30. A gauge that measures the yen's strength against currencies of Japan's major trading partners rose to a six-month high at the time amid broad weakness in the greenback. But the currency failed to hold gains and finished the second half of the fiscal year 1.6% lower as the BOJ added a reference to trade policies to its list of risks to the outlook for the economy and inflation. The likelihood of an interest-rate hike shrank further as the central bank this month delayed the expected timeline for reaching its inflation target. Overnight-indexed swaps signal a 64% chance of the central bank raising interest rates by 25 basis points by the end of the year. At the end of January, markets were fully expecting a quarter point hike or more by December. The yen's nominal effective exchange rate has edged up 0.8% since March 31. Asset managers and leveraged funds collectively boosted net yen longs to a record via futures and options earlier this month amid speculation the Trump administration's tariff policy will hit the global economy and fuel demand for haven assets. Unhedged positions risk causing losses should a drop in foreign currencies wipe out capital and income gains from overseas assets. That may prompt life insurers to rush for currency hedging, in turn exacerbating the slump in foreign currencies against the yen. Swaps, meanwhile, indicate an 83% chance of the U.S. Federal Reserve resuming rate cuts as early as September. Lower U.S. interest rates typically help reduce dollar hedge costs for Japanese investors, which are largely driven by the rate gap between the two economies. For this reason, "I see a rebound in demand for currency hedges going forward,' said Tsuyoshi Ueno, executive research fellow at NLI Research Institute in Tokyo.
Bloomberg
3 days ago
- Business
- Bloomberg
Japanese Life Insurers Cut Bullish Yen Hedges to 14-Year Low
Japanese life insurers cut protection for their foreign assets against a stronger yen to a fresh 14-year low, signaling subdued expectations of a sustained rally in the nation's currency. Nine of Japan's biggest life insurers collectively lowered bullish yen wagers tied to their foreign investment holdings to 44.4% at the end of the fiscal half in March from 45.2% six months earlier, according to a Bloomberg News analysis of their earnings reports.
Wall Street Journal
4 days ago
- Business
- Wall Street Journal
Yen Weakens Amid Risk-On Sentiment
0116 GMT — The yen weakens against other G-10 and Asian currencies amid risk-on sentiment, which typically undermines the safe-haven appeal of the Japanese currency. A federal trade court on Wednesday ruled that President Trump didn't have the authority to impose sweeping tariffs on virtually every nation. This news has lifted risk appetite, weakening the yen, says Matt Simpson, senior market analyst at StoneX, in commentary. USD/JPY rises 0.7% to 145.93; AUD/JPY adds 0.7% to 93.72; EUR/JPY is 0.3% higher at 164.01. (
Zawya
5 days ago
- Business
- Zawya
Yen shrugs off tepid bond demand, dollar firms on trade deal hopes
Japan's yen was steady on Wednesday as ructions in the bond market kept the spotlight on the fiscal health of major economies, while the dollar was firm due to upbeat consumer confidence data and hopes for more U.S. trade deals. The yen was broadly flat against the greenback at 144.28, after dropping 1% on Tuesday following a report by Reuters that Japan will consider trimming issuance of super-long bonds after a sharp rise in yields in recent weeks. The focus remained on the Japanese bond market, with demand at an auction of the country's longest-tenor bonds on Wednesday falling to the lowest since July. "Despite the news flow, there does appear to be some certain level of resistance in dollar-yen," Rabobank strategist Jane Foley said, in a sign that the market may not want to see the yen further weaken against the dollar for now. The yen has gained nearly 9% so far in 2025 due to broad dollar weakness and safe-haven flows as investors flee U.S. assets in the wake of the erratic trade policies under President Donald Trump that have roiled markets. DATA WATCH The dollar index, which measures the U.S. currency against six others, was last 0.1% higher at 99.65 but is down 8% for the year as investors look for alternatives to U.S. assets. The euro was also broadly flat at $1.1331 after dropping 0.5% on Tuesday as a bout of dollar buying swept the markets amid signs of possible trade deals and data showing U.S. consumer confidence in May was much better-than-expected. Still, new orders for U.S.-manufactured capital goods plunged by the most in six months in April as the flip-flopping tariff salvos take a toll on the economy and businesses, data showed on Tuesday. "More positive data surprises are needed to rebuild confidence in U.S. growth, and deficit worries aren't disappearing anytime soon," ING FX strategist Francesco Pesole wrote in a note. "When adding the themes of de-dollarisation and Trump's plans for a weaker dollar in the longer run, we still think the greenback rallies can fade from here." It is going to be a selective dollar weakening, with the euro and the yen likely being the key beneficiaries, said Sam Lynton-Brown, global head of macro strategy at BNP Paribas, during a call presenting the French bank's global economic outlook. The dollar was also supported by Trump's decision to delay higher tariffs on the European Union over the weekend. EU officials have asked the bloc's leading companies and CEOs for details of their U.S. investment plans, two sources familiar with the matter told Reuters, as Brussels prepares to advance trade talks with Washington. Sterling last bought $1.3488 but stayed close to the three-year high touched on Monday. Investors will watch out for the April Personal Consumption Expenditure report - the Federal Reserve's preferred inflation gauge - on Friday that could help gauge the impact of Trump's trade policies. Minutes of the U.S. Federal Reserve's meeting this month will be released later in the day. The Australian dollar last fetched $0.6438 as data showed consumer inflation held steady in April, leaving hopes for more interest rate cuts mostly intact. The New Zealand dollar firmed 0.33% to $0.5969 after the country's central bank signalled it might be nearer to an end to easing than some in the market had hoped for as it cut rates by 25 bps as expected. (Reporting by Ankur Banerjee, Johann M Cherian in Singapore and Linda Pasquini in Gdansk; Editing by Helen Popper, Kirsten Donovan)
Free Malaysia Today
5 days ago
- Business
- Free Malaysia Today
Yen shrugs off tepid bond demand, dollar firms on trade deal hopes
The yen has gained nearly 9% so far in 2025 due to dollar weakness and safe-haven flows. (AP pic) SINGAPORE : The Japanese yen was steady today as ructions in the bond market kept the spotlight on the fiscal health of major economies, while the US dollar was firm due to upbeat economic data and signs of easing trade tensions. The yen cut its losses to trade flat at 144.445 per dollar after dropping 1% yesterday in the wake of reports that Japan will consider trimming issuance of super-long bonds after a sharp rise in yields in recent weeks. The focus remained on the Japanese bond market, with demand at an auction of Japan's longest-tenor bonds today falling to the lowest since July. The 40-year JGB yield spiked to a record high last week as worries about the debt load in Japan and other developed markets like the US led to a selloff in the longest-dated bonds across the globe. Today, yields on Japanese government bonds were elevated, as were US Treasury yields, but the reaction in the market was fairly muted. 'The (Japan) bond auction today is somewhat a little bit weaker than expected … what this goes to show is that there's a lot of focus on the trajectory of debt and deficits globally,' said Michael Wan, senior currency analyst at MUFG. The yen has gained nearly 9% so far in 2025 due to dollar weakness and safe-haven flows as investors flee US assets in the wake of the erratic trade policies under President Donald Trump that have roiled markets. Frances Cheung, head of FX and rates strategy at OCBC, said the market reaction to the soft auction result had been muted so far, 'probably as the bond sales had already been expected to suffer a bit after the latest richening in the bond'. Fiscal outlook Fiscal worries are front of mind for investors after Moody's downgrade of the US credit rating on a rising debt burden this month and soft demand for a US Treasury Department bond auction last week that lifted 30-year Treasury yields above 5%. The euro was 0.2% weaker at US$1.1306 after dropping 0.5% in the previous session as a bout of dollar buying hit the markets amid signs of possible trade deals and data showing US consumer confidence in May was much better than expected. Still, new orders for key US-manufactured capital goods plunged by the most in six months in April as the flip-flopping tariff salvos take a toll on the economy and businesses. The US dollar was also boosted by Trump's decision to delay higher tariffs on the EU over the weekend. EU officials have asked the bloc's leading companies and CEOs for details of their US investment plans, two sources familiar with the matter told Reuters, as Brussels prepares to advance trade talks with Washington. Sterling last bought US$1.34885 but stayed close to the three-year high touched on Monday. Worries about Britain's stretched finances have also weighed on investor appetite for the country's debt. The dollar index, which measures the US currency against six rivals, was last 0.25% higher at 99.776 but is down 8% for the year as investors look for alternatives to US assets. Investors will watch out for the April personal consumption expenditure report – the Federal Reserve's preferred inflation gauge – on Friday that could help gauge the impact of Trump's trade policies. The Australian dollar last fetched US$0.6436 as data showed consumer inflation held steady in April, leaving hopes for more interest rate cuts mostly intact. Last week, the Reserve Bank of Australia lowered interest rates by 25 basis points. The New Zealand dollar firmed 0.29% to US$0.5966 after the country's central bank signalled it might be nearer to an end to easing than some in the market had hoped for as it cut rates by 25 bps as expected.
