Japanese investors offloaded a record amount of overseas debt last year as hedging costs rose and speculation the Bank of Japan would normalize policy-fueled bets on local yields higher.
Fund managers in the country reduced their holdings of foreign fixed-income securities by 23.8 trillion yen ($181 billion) over the period, according to balance of payments data released by the Ministry of Finance on Wednesday. It was an absolute record in the data, which begins in 1996.
The cost for Japanese investors to hedge against foreign currency volatility soared last year as central banks around the world raised interest rates to fight inflation. Growing speculation that the Bank of Japan would reverse its super accommodative monetary policy put upward pressure on local yields, increasing their appeal over foreign debt elsewhere.
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