City skyline and harbour are seen at sunrise from a quarantine bus window during the Tokyo 2020 Olympic Games in Tokyo, Japan July 24, 2021. REUTERS/Maxim Shemetov/File PhotoORLANDO, Florida : Japan solidified its status as the world's largest creditor last year as the country's net international investment position grew to a new all-time high as a share of gross domestic product.
As long as yields on foreign bonds remain significantly above equivalent Japanese yields, repatriation flows back into Japan are unlikely to materialize. That's $3.36 trillion at Dec. 31 exchange rates and marks an increase of 51.3 trillion yen, or $366.5 billion, from a year earlier. It's also a record 84.3 per cent of GDP, up sharply from 76.6 per cent a year earlier and a reminder of Japan's muscle on the global financial stage.
Of the 86.1 trillion yen or $615 billion increase in the value of Japan's portfolio investments abroad last year, around 40 per cent was due to exchange rate moves, almost a third a result of"other changes", and only 20 per cent from actual asset purchases. The yen fell 7 per cent against the dollar last year, 12 per cent the year before that, and is down a further 10 per cent so far this year to an all-time low 160.00 per dollar. The yen's broad effective exchange rate is the weakest it has been since the era of free-floating exchange rates was established in the early 1970s.
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