Gov. Haruhiko Kuroda previously stated “there is no problem if the yield falls into negative territory” so long as it falls within the Bank of Japan’s target range of zero, plus or minus 0.2 percentage point.
“There’s no need to worry if yields reflect the economy, prices and financial conditions at home and abroad,” Kuroda added.
Government bond prices have been rallying around the global, with yields falling in response, as the risk-off environment pushed investors out of risky assets and into safe havens.
The Japanese yen has traditionally acted as a safe haven play, strengthening in periods global financial distress. The safe-haven status may be partly due to Japan’s record debt levels, ongoing battle with low inflation and ultra-low interest rate levels. Furthermore, the country is know as a larger exporter and maintains a current account surplus.
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