Bank of Japan Flags Offshore Hedge Fund Deleveraging as Risk to Bond Market

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Gate News message, April 21 — The Bank of Japan warned in its semi-annual Financial System Report that offshore hedge funds are gaining influence in Japan’s bond market, flagging the risk that global deleveraging by foreign hedge funds could transmit shocks to the market through reduced liquidity and other channels.

The central bank emphasized the need to closely monitor this scenario, noting that if offshore hedge funds face pressure and unwind positions globally, the impact could spread to Japan’s debt market through mechanisms such as tightening market liquidity conditions.

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