Carry Traders Rebuild Yen Shorts as Currency Slides Toward 160 per Dollar
Updated
Updated · Bloomberg · Aug 14
Carry Traders Rebuild Yen Shorts as Currency Slides Toward 160 per Dollar
3 articles · Updated · Bloomberg · Aug 14
Summary
The yen has drifted back toward 160 per dollar, putting it on course for its worst week against the greenback since mid-May despite joint US-Japan intervention two weeks ago.
Wide interest-rate gaps are driving the move: investors can still borrow low-yielding yen cheaply and funnel the proceeds into higher-yielding assets through carry trades.
That dynamic has turned each bout of official support for the yen into a fresh selling opportunity, with traders using intervention-led rebounds to rebuild short positions.
The renewed slide underscores how hard it is for Tokyo and Washington to reverse the currency's direction without a narrower gap between Japanese rates and those abroad.