The European Central Bank's undercutting of the Bank of Japan with negative interest rates looks set to accelerate Japanese sales of German bunds, while falling short of the fund flows needed to weaken the yen.
Germany's two-year bunds yielded 4 basis points less than equivalent Japanese government bonds on Thursday, the least since July, according to data compiled by Bloomberg.
Japanese investors dumped the most medium to long-term German bunds on record in March, Finance Ministry data going back to 2005 showed last month. They may shift money to JGBs from European debt, according to SMBC Nikko Securities Inc.
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