Potential Tax-Free Incentive for Holding Japanese Bonds Could Help Yen
Dow Jones
Oct 09
1305 GMT - Japan potentially introducing tax-free opportunities to hold domestic government bonds would have positive implications for the yen, MUFG Bank's Derek Halpenny says in a note. It would possibly impact flows into foreign equity markets, supporting the yen, he says. Japan Investment Trust flows showed foreign equity purchases reached a record high of 3.9 trillion yen in the three months to September. This captures household buying of foreign securities via the NISA tax-free investment program, Halpenny says. "Annualizing this three-month flow implies an outflow of close to 16 trillion yen and is an increasing negative yen factor." In July, Finance Minister Satsuki Katayama floated the idea of adding Japanese government bonds to NISA. The dollar rises 0.2% to 158.23 yen.
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