Global funds sold the largest amount of short and intermediate Japanese government bonds in two decades last month as persistent yen weakness fueled speculation of monetary policy tightening. The selloff represents the biggest foreign outflow from Japan's medium-term debt market since 2006, highlighting growing investor anxiety over the currency's depreciation.

According to Bloomberg data, the exodus was driven by expectations that the Bank of Japan may be forced to raise interest rates or adjust its yield curve control program sooner than previously anticipated. The yen has weakened significantly against the dollar this year, amplifying imported inflation pressures and complicating the central bank's policy calculus.

Market participants are closely watching for any signals from Japanese authorities regarding potential intervention or a shift in monetary stance. The magnitude of the outflow underscores how vulnerable Japanese government bonds have become to global rate differentials and currency moves.