The gulf between interest rates in the U.S. and Japan means traders are still betting against the yen — even after authorities likely intervened in recent weeks to prop up the beleaguered currency.
Hedge funds held more than 77,000 contracts tied to wagers that the yen will fall in the week ending Tuesday, about twice as many as they did a year ago, according to data released Friday from the Commodity Futures Trading Commission. Asset managers boosted bearish bets by about 6,500 contracts to nearly 60,000, marking the biggest increase since March, the data show.
While volatility has eased in recent days, ameliorating some of the impetus for further forays by officials into currency markets, the gulf between Japan’s ultralow interest rate and U.S. rates stuck at a two-decade high is keeping the pressure on the yen. The currency is the worst-performing among Group-of-10 peers, falling about 12% over the past year. It is also the most shorted among major currencies tracked by the CFTC, Bloomberg-compiled data show.