06:30 AM EDT, 08/29/2024 (MT Newswires) -- What the depreciation of the US dollar (USD) has clearly done is to lift the appetite in Japan for buying international bonds and equities, said MUFG.

Japanese investors bought 899 billion yen worth of international equities last week and on a four-week basis have purchased 2,217 billion yen worth, the largest total since January 2023, wrote the bank in a note to clients.

The buying of international bonds was even more impressive with purchases totaling 1,543 billion yen and on a four-week basis buying totaled 5,613 billion yen -- which is in fact a record four-week total in the history of the weekly cross-border flow data from the ministry of finance (MoF) going back to 2001, stated MUFG.

The mix of a substantial drop in USD/JPY and then the revival of risk appetite coupled with still a favorable global inflation backdrop have combined to prompt a surge in international securities purchases, according to the bank.

Given the limited recovery in USD/JPY on these record outflows MUFG can assume Japanese banks with available US dollars may have been the dominant buyer and/or that other market participants have remained heavy sellers of USD/JPY.