Individuals and companies sharply increased their foreign-currency deposits, with the average balance for the April-June quarter rising approximately ¥4 trillion year on year, the largest increase on record. The trend toward asset diversification has spread against a backdrop of yen depreciation.
Foreign-currency deposits held at banks in Japan totaled approximately ¥26.1 trillion in the April-June quarter, up 18% year on year. The figures, based on a Bank of Japan survey, show that inflows of funds remain solid even excluding the increase in yen-converted values caused by the stronger dollar.
Foreign-currency deposits are increasing among both individuals and companies, and expectations that the yen will weaken further are encouraging asset diversification. This appears to be raising awareness of the need to diversify into overseas assets.
Some observers say the increase in foreign-currency deposits is creating a cycle that adds fresh downward pressure on the yen in the foreign exchange market. Inflows driven by asset diversification may continue.
The Bank of Japan's survey results have once again confirmed the substantial expansion in foreign-currency deposit balances in Japan.