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Hedge funds rebuild yen short bets as yen weakens

In the week ending 29 September, leveraged traders held a net short yen position of about JPY210bn, while speculative investors erased prior bullish exposure.

Reported · Written up by our desk · Hedge Funds

Hedge funds have increased bearish positioning on the Japanese yen as the currency keeps weakening against the dollar, according to a Bloomberg report cited by Hedgeweek, with traders also weighing whether the Bank of Japan will tighten policy enough to support the yen.

CFTC data showed leveraged traders held a net short yen position equivalent to about JPY210bn, roughly $1.3bn, in the week ending 29 September, and that the shift followed an earlier two-week period in which investors built net bullish exposure that was later erased.

The yen declined for a third straight week, and CFTC reporting also indicated leveraged funds increased bullish exposure to the US dollar during the latest reporting period, reflecting the continued interest rate gap between Japan and the United States.

Hedgeweek noted that while Japan’s central bank raised interest rates as expected last month, its policy guidance was seen as relatively cautious, leaving the yen weighed down by the still wide dollar-Japan rate differential.

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