Nakahina buys yen: a misunderstanding?!

Norinchukin Bank is recording massive unrealized losses on its overseas bond investments(Norinchukin Agricultural Cooperative)has seen growing claims in the currency market that it buys yen when selling foreign bonds. In the first place, if Norinchukin had purchased foreign bonds without FX hedging, the substantial foreign exchange valuation gains would have outweighed the bond valuation losses, and such losses would not have occurred in the first place. This article explains the background of Norinchukin’s overseas bond valuation losses and the future trajectory of the dollar-yen exchange rate.