Economics class: Japanese investors buy UK government bonds at record rate in early 2021
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Fiscal policy, exchange rates
Click to read the article below and then answer the questions:
Explain why the UK government issues bonds.
What proportion of UK bonds are held by overseas investors?
The chart illustrates that Japanese investors have been buying UK government bonds at a record clip. Using a diagram, analyse the effects of this buying spree on the UK bond market.
Hideki Kishida refers to currency risk. Explain why a volatile £:¥ exchange rate would deter Japanese investors from purchasing UK assets.
Gavin Clarke, Emmanuel College