The yen looks to be losing its appeal as the currency of choice to fund so-called carry trades, with speculators cutting bearish bets on it to the lowest level in nearly four months in the wake of this week’s shock move by the Bank of Japan.
Leveraged funds cut their net-short position on the yen by 8,274 contracts to 13,207, the lowest level since the end of August, according to data from the Commodity Futures Trading Commission for the week through Tuesday. That was the day that the BOJ rocked markets with its decision to loosen the parameters of its yield-control policy, sending the currency soaring by close to 5% on the day at one stage.
The yen has lost some ground since then, but late on Friday was still 2.8% stronger than it was a week earlier. And some analysts predict it may strengthen further as the central bank eventually edges away from its policy of near-zero borrowing costs.