$87 billion intervention curbs carry-trade shorting opportunities; yen retraces half its gains, approaching 160, as the Takaichi administration strongly backs an autumn rate hike
The record-breaking joint foreign exchange intervention by Japan and the United States failed to reverse the yen's weakness, instead providing carry traders with an opportunity to rebuild short yen positions at higher levels. In the face of wide interest rate differentials, any effort to support the yen may simply offer new entry points for short sellers. The approximately $87 billion in joint intervention undertaken by Japan and the U.S. in late July resulted only in a brief rebound in the exchange rate. According to market observers such as JPMorgan Private Bank and State Street Bank & Trust, hedge funds had halved their short yen positions by August 4, but some investors have already begun returning to yen-funded carry trades, causing the yen to give back its gains.
wallstreetcnAug 14 16:36
