On Friday, Japan’s finance minister Katayama came out to say that the government would seek avenues to encourage the GPIF to make “substantially greater investments in Japanese financial assets”.
That helped to spark some gains in the yen currency and the domestic bond market, amid speculation that it could lead to billions of dollars potentially flooding into Japanese markets via the GPIF – the world’s largest pension fund
For some context, the fund manages $1.8 trillion in assets when last accounted for in Q1 2026. But then earlier today, Reuters was out with a report in citing sources that Japan has no immediate plans to change target asset allocations of its state pension funds. However, the sources do note that the directive could still work within existing allowable ranges to channel more investment to domestic assets. One of the sources noted that Katayama’s remarks on Friday were not intended to imply a change in the asset allocation.
That led to USD/JPY climbing back up earlier today to 162.35 before Kihara’s remarks above. Japan’s chief cabinet secretary now says that GPIF has the mandate to tweak its basic portfolio as need be, which hints at a potential change. That is seeing USD/JPY pare back its advance to 162.00-10 levels on the day.