Prime Minister Shinzo Abe's inflation drive may get a boost as Nomura Holdings Inc. forecasts as much as $200 billion in foreign asset purchases by Japan's pension funds will weaken the yen.
Nomura predicts a sell-off of local bonds by the $1.3 trillion Government Pension Investment Fund will weaken the nation's currency by about ¥10 against the dollar over the next 12 to 18 months, while Mitsubishi UFJ Morgan Stanley Securities Co. estimates an ¥8 slide. GPIF and other public pension funds will shift an additional ¥12.4 trillion into foreign bonds and ¥7.5 trillion into overseas stocks, according to Nomura's "upside scenario."
The yen's 18 percent drop last year helped push inflation to a five-year high in December by increasing the cost of fuel imports. Price growth has since stalled as the yen rebounded and the Bank of Japan refrained from expanding its unprecedented easing. GPIF's reshuffling may come as early as this month, when Abe delivers his updated growth strategy to the Diet.
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