#数字资产市场动态 Yen is once again being hunted by bears

Hedge funds have recently made a big move—疯狂押注日元跌跌不休。During the week in mid-December, leveraged funds' net short positions in yen soared to 85,000 contracts, the second-highest level since July this year. Even more astonishing, this has been rising sharply for two consecutive weeks, with the previous week reaching a peak of 92,000 contracts.

Why is the yen so popular for shorting? Essentially, it’s the 3 percentage point interest rate differential between the US and Japan. The Federal Reserve maintains high interest rates, while the Bank of Japan has started to raise rates but still lags far behind the US. What does this lead to? Holding yen feels like losing money—the inflation eats into the policy rate returns, and the real interest rate is deeply rooted in negative territory.

Looking at it from another angle, as an investor, if your yen assets are actually depreciating, would you still hold them? Probably not. Everyone is selling off yen and shifting to higher-yield assets. This wave of selling has been brewing since July, accompanied by the dollar/yen exchange rate climbing higher and higher, making the yen’s decline even more apparent.

Looking back to last year, when the dollar/yen broke through the 160 mark, Japan’s Ministry of Finance was forced to intervene in the currency market to stabilize the situation. Now, with the yen pushed to the edge of a cliff again, will a new round of currency defense battles unfold? The market is waiting for that answer.