TOKYO
The yen has returned to roughly JPY160 per dollar, erasing most gains from Japan's massive currency intervention in late July. Hedge funds are re-establishing short yen positions, betting the low-yielding currency will weaken as the initial impact of the $34 billion July 31 and $53 billion prior-day operations dissipates.
The carry trade—borrowing yen at Japan's 1 percent policy rate to invest in higher-yielding assets—remains structurally attractive. Funds had cut bearish yen bets by half through Aug. 4 following intervention, but real-money traders never fully exited. Now they are redeploying.
Alpha Binwani Capital founder Ashwin Binwani resumed dollar-yen longs around JPY157, betting on renewed yen depreciation. State Street Bank Trust's Tokyo branch manager Bart Wakabayashi said proprietary data shows real-money investors maintaining carry positions across Group-of-10 currencies.
The Australian dollar remains the most popular counterpart, followed by the euro, U.S. dollar, Canadian dollar and British pound. Yen shorts against higher-yielding emerging-market currencies—Colombian peso, Turkish lira, Norwegian krone—have returned over 10 percent this year.
JPMorgan Private Bank's Asia head of rates and foreign-exchange strategy, Yuxuan Tang, said a move to JPY162 per dollar is possible if the dollar and U.S. Treasury yields hold firm. That would pit traders directly against Japanese policymakers.
Japan's July 30 intervention—estimated at $53 billion—would be the nation's largest single-day currency operation on record if confirmed.
U.S. Treasury Secretary Scott Bessent has backed efforts to stabilize the yen, warning that sustained Japanese currency weakness could trigger broader depreciation across Asian markets.
Japan's Ministry of Finance reported that domestic investors purchased the largest volume of foreign assets in over two years last week, reflecting capital outflows seeking higher returns abroad.
