The FT’s Alphaville blog helps break down where Japanese investors will put their money after they sell their JGBs to the Bank of Japan.
They say France will see large inflows but Italy and Spain may be left out because “decisions to avoid these markets were made a while ago by powerful people within Japanese institutions– they won’t be reversed quickly.”
Maybe the prime takeaway for FX is that they see more Australian bond buying. They also see flows into emerging markets — something that could add force countries to intervene and add volatility. Today the Chilean peso hit a 1.5 year high to a level that triggered intervention in 2011.
