Pacific Investment Management (Pimco) is buying the yen on a bet the Bank of Japan will be pressured into tightening monetary policy as inflation quickens.

The bond giant started building a long yen position when Japan’s currency weakened past ¥140 per dollar a few months ago, said Emmanuel Sharef, a Pimco fund manager, whose areas of focus include multi-asset investing and asset allocation.

"As we continue to see inflation in Japan rising and being steadily above their target, they will want to move in the direction of abandoning or changing their yield curve control (YCC) policies and eventually there might be a need for a hike,” he said last week in an interview in Singapore.