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Forex pairs in this Article » USD/JPY (Barcelona) - The USDJPY rally from 79.00 is now in its tenth week, and the latest official portfolio flow data from Japan's Ministry of Finance has caught up with the price action. According to Research Analyst Gareth Berry at UBS, "The data show that foreigners have been highly active during the recent rally, while domestic Japanese investors still remain on the sidelines."

The greatest activity in the portfolio space has been via equities - foreigners have loaded up on Japanese stocks in anticipation of a yen-induced boost to corporate earnings, while foreign holders of Japanese equities typically hedge their FX exposure, neutralizing the yen impact from these portfolio inflows. There is no evidence of panic JGB-selling on inflation fears.

Meanwhile, "Japanese investors seem in no hurry to join in the yen selling and we should not expect them to any time soon either - as our data shows that the urge to invest overseas is strongest when the yen itself is strong. At such times the purchasing power of the yen is at its height and so this tendency should not be surprising." Berry adds.
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