Global Market: Yen speculators turn net long for first time since February

Speculators turned bullish on the yen for the first time since February, signalling growing momentum behind Japan's currency as markets increasingly anticipate faster interest-rate hikes by the Bank of Japan, Reuters reported.

Yen futures data from the U.S. Commodity Futures Trading Commission showed that net non-commercial positions stood at 10,796 long contracts in the week ended September 8, compared with net short positions of 92,227 contracts a week earlier. It was the first net-long reading since the week ended February 24, Reuters reported.

Expectations of Faster BOJ Tightening

The shift in positioning comes as the yen has strengthened sharply this month, driven by expectations that the BOJ could accelerate its monetary policy tightening cycle. Investors are also watching for the possibility that Japanese investors could repatriate overseas assets, potentially providing additional support to the currency.


According to Reuters, the dollar-yen exchange rate reached 152.89 on September 8, its strongest level for the yen since February 17.

The change in speculative positioning marks a notable turnaround after years of pressure on the Japanese currency. Investors have increasingly reassessed the outlook for Japan's interest rates as inflationary pressures and expectations of further BOJ tightening have strengthened.

Yen Recovers From Four-Decade Low

The yen's prolonged decline accelerated after the election of fiscal dove Sanae Takaichi as prime minister last October, raising concerns that fiscal policy could remain loose even as the BOJ struggled to keep pace with monetary tightening expectations.

The currency subsequently fell to a four-decade low of 163.99 per dollar in July, before recovering after intervention efforts by Tokyo and Washington aimed at supporting the yen.

The latest futures data suggest that sentiment toward the currency has now shifted decisively. A move from more than 92,000 net short contracts to nearly 11,000 net long contracts in a single week highlights the speed at which investors are reassessing the yen's prospects, Reuters reported.

Further gains could depend on the BOJ's policy path, developments in Japan's economy and inflation, as well as the willingness of Japanese investors to bring overseas funds back home.