The spread between the yen’s foreign and domestic swap rates is shrinking as Bank of Japan Governor Haruhiko Kuroda’s repeated commitment to the ultra-loose policy prompts overseas investors to turn back to the nation’s government bonds.
The spread between 20-year yen swap rates quoted on Japan Securities Clearing Corp. and London’s LCH Clearnet is down to 7.25 basis points, the narrowest since December. It swelled to a record 15.5 on Jan. 10, a day after the BOJ’s move to trim purchases of some bonds spurred speculation it was looking to taper stimulus.
