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Yen outperforms as Japan urges more household and GPIF investment

The yen’s strength is tied to Finance Minister Katayama’s push to increase domestic investment, a shift seen as taking time as investors weigh Bank of Japan credibility.

Reported · Written up by our desk · Major Pairs

The Japanese yen is leading gains among G10 currencies after Japan’s Finance Minister Katayama urged households and the GPIF to increase investments in Japanese financial assets, according to FXStreet.

MUFG’s Derek Halpenny said the policy shift has taken markets by surprise and is expected to play out gradually, with the Bank of Japan’s credibility considered key before domestic investors materially reallocate from foreign assets back into JGBs.

Halpenny added that the surprise has not only supported the yen but also affected Japanese equities and the JGB market, with yields down by more than 10 basis points.

He noted that, despite the near term move, the yen’s impact may remain limited until investors have more confidence in the policy path and the BoJ’s role in it.

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