The yen gained against a broad basket of foreign currencies as the carry trades which have caused the currency to haemorrhage have unravelled, a Japanese report has found.

The yen rose to ¥118.13 against the dollar and ¥156.24 against the euro in early foreign exchange trading on Thursday.

It also gained versus 15 of the 16 most-traded currencies as the yield gap on fixed-income securities between Japan and Germany and the US shrank to a two month low.

An auction of ten year government bonds today drew the most demand for two years reports Bloomberg.

"Foreigners' share of the Japanese government bond market has risen significantly," said Masashi Kurabe of the Bank of Tokyo-Mitsubishi. "It's supportive of the yen."  

The Japanese finance ministry report showed that overseas investors were net buyers of securities worth ¥1.37 trillion in the week ending February 24th.