Flash: Japanese Retail net buyers of BRL for 7th week in a row - Nomura

FXstreet.com (Barcelona) - Nomura strategist Yujiro Goto notes that Japanese retail investors were net buyers of BRL last week for the seventh week in a row (JPY2bn or USD20mn).

He adds that net BRL investment in May reached JPY39bn while the Brazilian government announced it was ending the IOF on fixed income assets, but a large part of the recent Japanese retail investment in BRL has been done via currency selection-type toshins in which retail investors do not invest in the Brazilian bond market while taking on only currency risk. He feels that there may be some increase in Japanese investment in the Brazilian bond market via toshins, but the most popular type of toshins are foreign currency denominated Japanese equity investment. They write, “Thus, we believe a large part of BRL investment by retail investors will still be via currency selection-type toshins and the impact of the ending of IOF on toshin momentum on BRL will be limited.”