Libor Is Hurting Japan's Appetite for Foreign Assets
- Regional banks cut foreign holdings to lowest since Nov. ’14
- Hedging costs have risen over 50 basis points so far this year
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The ripple effects from Libor’s surge have traveled as far as regional Japan.
As the benchmark for U.S. borrowing costs climbs, it becomes more expensive to hedge dollar-denominated investments back into yen. That’s prompted the country’s regional banks to reduce overseas holdings to the lowest in more than three years, even as another element of their hedging costs - the cross-currency basis - moves in their favor.