Dollar at 163 yen still offers allure for yen carry trades, latecomer investors shift stance

MacroDigital Finance

โดย Reuters·Read original

Summary · why it matters

Even as the dollar rises to the 163 yen level for the first time in about 40 years, some see continued appeal in yen carry trades that target the interest rate gap between Japan and the United States. A currency dealer at a domestic financial institution noted that while wariness of intervention kept them from entering carry trades, accountability to institutional investors made it harder to explain unrealized profits, and pointed to the possibility of a policy shift by investors who missed the boat. The policy rate gap between Japan and the US has narrowed to 2.5 to 2.75 percent, but one-month implied volatility has fallen sharply to around 6 percent from above 11 percent at the end of January, creating an environment conducive to carry trades. Junya Tanase of JPMorgan Chase Bank expressed the view that the authorities' intervention stance is more cautious than expected and that the defense line has disappeared, while Akira Moroga of Aozora Bank noted that early position building can capture more interest rate differential returns. Meanwhile, Fukuhiro Ezawa of Standard Chartered Bank sees speculative yen short positions already bloated, leaving little room for new entrants.