Mrs Watanabe stays sceptical of strong yen, piling up short bets

Japanese retail investors continue to hold doubts about the strength of the Japanese yen, amassing large short positions that could contribute to increased volatility in currency markets. The yen reached a seven-month peak against the dollar last week, causing investors to switch from short to long positions as they grew more confident in the Bank of Japan's tightening policy.

However, domestic brokers report that retail investors in Japan remain skeptical of the yen's future, with short bets at 2.886 trillion yen, which accounts for over half of the global total of 4.1 trillion yen. These positions would need to be reduced if the yen continues to appreciate, potentially amplifying the currency's gains, according to senior strategist Maruyama from SMBC Nikko Securities.

Analysts believe that the yen may strengthen further if the Federal Reserve maintains stable interest rates or adopts a more dovish stance while the Bank of Japan remains hawkish, according to Uehara from Gaitame.Com.