Japan bond yield surge puts ringgit in the spotlight
KUALA LUMPUR: Japan's bond market is becoming a competitor for global capital again, raising the prospect of money flowing back to the country and putting pressure on the ringgit and Malaysian assets, analysts said.
Japan's benchmark 10-year government bond yield recently surpassed three percent, marking a significant milestone since 1996. This development has spurred concern among analysts, as it could lead to increased capital inflows into the country, potentially exerting pressure on Malaysia's ringgit and Malaysian assets. Stephen Innes, from SPI Asset Management, suggested that such a yield level might encourage Japanese institutions to retain or repatriate funds previously invested abroad.
While the immediate impact on Malaysian equities is expected to be modest, the situation could become more pronounced if global bond sell-offs intensify. The ringgit has, however, displayed resilience, gaining against the US dollar in August, although it initially weakened earlier in the month. As of now, higher Japanese bond yields may pose a risk to both the ringgit and Malaysian equities, albeit a more immediate concern remains the direction of US long-term interest rates.
Written by urgent.news from New Straits Times's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
