Yen’s changing fortunes might finally be spooking the bears
New tailwinds from capital repatriation, unwinding carry trades and U.S. political pressure are now giving short speculators cause to rethink their long-term game.
LONDON/SINGAPORE/TOKYO – After plummeting to a four-decade low against the dollar, the yen appears to be showing signs of recovery, according to market observers. Despite central bank rate hikes and record currency intervention failing to provide sustained support, new factors such as capital repatriation, unwinding carry trades, and U.S. political pressure are causing short speculators to reconsider their long-term bearish stance.
Fixed income portfolio manager Rong Ren Goh noted that "market psychology around the yen seems to be shifting," with investors becoming less inclined to aggressively bet against the Japanese currency, especially with the possibility of a Bank of Japan rate hike in September adding further risk to the trade.
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