Osamu Takashima Rates Quotations

When interest rates increase, they have a capital loss. During a time of ECB rate increases, Japanese investors don't want to buy European bonds.

Most market players have already factored in another 25-basis point hike in the key federal fund rate in the FOMC meeting next month, but whether the Fed will keep raising rates in May depends on economic data, such as the CPI.

Expectations of further increases in U.S. interest rates are partly encouraging investors to take money out from Asian stocks. Fund outflows have been weighing on regional currencies.

The comment suggests the possibility they will raise rates further, supporting the peso. They will maintain the advantage of higher rates.

It seems that investors are beginning to think that rises in US interest rates may continue for longer than previously thought, and in line with this view they are likely to continue covering short dollar positions in the near-term.