Japan’s Haven Status Shielded by Role as World’s Top Creditor

While the shift to buy yen after North Korea lobs missiles over Japan may appear counter-intuitive, there’s one main reason why the country remains a haven for investors: it’s the biggest net creditor in the world.

Japan’s net foreign assets rose 3 percent to 349.1 trillion yen ($3.2 trillion) last year. That compares with China, which held the equivalent of 210.3 trillion yen, Japan’s Finance Ministry said in May.

While China’s yuan has recently displayed some characteristics of being a haven amid the Korea turmoil, it has a long way to go before catching the yen.

Here’s why: the International Monetary Fund projects Japan’s current account surplus will remain far bigger than China’s for years to come. Japan’s surplus is tipped to reach $230.3 billion in 2022, well ahead of the $168.4 billion expected for China.

On Friday, markets seemed to have missile fatigue. The yen was little changed at 110.37 per dollar after earlier gaining as much as 0.6 percent, and the yuan was also steady.
Source: Bloomberg