Japan's Katayama Urges Pension Funds to Hold More Domestic Assets, Yen Rises 0.6%

The Japanese yen strengthened 0.6% against the US dollar and Japanese government bond yields plunged as much as 10-11 basis points after Finance Minister Katayama signaled a new approach to support the currency. Katayama said she intends to urge major pension funds, including the world's largest, GPIF, to increase their allocations to domestic financial assets.

This policy shift aims to bolster the yen without resorting to direct market intervention, which has been a sensitive tool. The move could reduce the persistent outflow of Japanese capital into foreign assets, especially as global interest rate differentials have kept the yen under pressure.

The announcement comes as markets also focus on SK Hynix's $26.5 billion US IPO expected Friday, though the post does not explicitly link the two events. JGB yields dropped sharply, reflecting increased demand expectations for domestic bonds from pension funds.