Institutions Raise Yen Short Bets to $11bn Despite Intervention

Leveraged funds and asset managers increased their combined short positions in the Japanese yen to $11 billion, the largest level since July 2024. Short exposure rose for three consecutive weeks, adding about $5 billion over that period.

Tokyo authorities sold dollars across a roughly one-month stretch between late April and late May, deploying 11.73 trillion yen, about $73.6 billion, to slow the yen’s decline. That amount exceeded the 9.79 trillion yen spent in 2024 for similar interventions.

The intervention produced a brief rebound in the yen. On April 30 the currency moved from about 160.725 per dollar to roughly 155.50 and approached 155 by May 6. By early June the yen had weakened back toward the 160 level.

Market participants cited the wider international backdrop, including conflict in the Middle East, as a factor adding pressure to global markets and currency flows during the period.

Analysts point to the interest-rate gap between Japan and the United States as a structural driver of yen weakness. The Bank of Japan’s policy rate is near 0.75%, well below US policy rates, which encourages carry trades where investors borrow in low-yielding yen to buy higher-yielding assets abroad.

When those funded positions are built or unwound, they can amplify currency moves and increase short exposure in the yen.

Markets are focused on the Bank of Japan policy meeting on June 16. Some economists expect the BOJ could lift its rate toward 1%, which would narrow the gap with US rates and could affect existing short positions.

Finance Minister Satsuki Katayama said authorities remain prepared to act on foreign exchange, stating, “As for foreign exchange, we continue to maintain our stance that we stand ready to take appropriate action at any time, as needed.”

Short positions concentrated in leveraged funds and asset managers are near the highest levels seen in the past year and have stayed elevated even after the large-scale intervention.