A danger now not worth TAKING

The bank also plans to keep growing funding in overseas bonds with forex hedging - a famous method amongst eastern institutional investors.

Sago said the financial institution has little appetite for foreign money dangers.

Given the volatility of currencies and their returns, "you may see it's far a threat now not really worth taking until you have a sturdy conviction that the yen will fall," Sago stated.

He said the yen remains pretty reasonably-priced in phrases of purchasing strength however its contemporary degrees, around 108 yen to the dollar JPY=, are near truthful value given the possibilities of economic tightening in the united states and easing in Japan.

Sago also stated he advises towards shopping for lengthy-term JGBs at present day ranges.

The 30-yr JGB yield fell to round zero.three percent JP30YTN=JBTC from 1.2 percentage earlier than bad hobby prices, as traders flocked to bonds nevertheless having advantageous returns.

but Sago stated the sharp fall can't be justified as the BOJ's rate cut changed into simply 20 foundation factors, to minus zero.10 percentage from plus zero.10 percent.

"You should avoid making funding judgment by means of paying too much interest to warding off negative hobby fees," he said.

In Japan, Sago added, "bad costs are emotionally affecting investment judgments. To avoid negative interest of some billion yen, (some investors) are making investments that could lead to a loss that is 10 instances, or even a hundred times larger. this is very dangerous."