Japan's negative rates prompt allocation rethink

摘要

The Bank of Japan's surprise decision to cut a key interest rate to below zero has rekindled speculation of a wave of overseas investments that could lift US dollar credits. The central bank announced on January 29 that it would charge 0.1% on new funds deposited to BOJ current accounts, following the European Central Bank and the Swiss National Bank in imposing a negative interest rate to encourage banks to deploy their funds and stimulate the economy. The move pushed Japanese government bond yields to record lows and rocked Samurai bond sales last week as local investors paused to rethink their allocation strategy.