Opinion: Japanese housewives not keen on FX losses

By Roger J Kerr The maturity profile of uridashi and euro-kiwi NZD denominated bonds held by foreign investors is averaging NZ$ 1 billion per month over the next 12 months. However. the rollover rate of maturing issues into new bond issues is near to 50%, resulting in net NZD selling of NZD0.5 billion per month.  While NZ interest rates have collapsed to record low levels, these new issue bonds are still providing yield returns over 4.00% to Japanese retail investors which is 4.00% higher than local bank deposits. The reinvestment rate is also partially being held up by many Japanese retail investors not wanting to realise in cash the FX loss between the JPY/NZD entry levels of 80 plus and today's exchange rate of 51. The result is that the maturity profile the uridashi/euro-kiwi is perhaps not going to have the significant negative impact on the NZD exchange rate that as first thought. ---------------- * Roger J Kerr runs Asia Pacific Risk Management. He specialises in fixed interest securities and is a commentator on economics and markets. More commentary and useful information on fixed interest investing can be found at rogeradvice.com