Hedge funds have significantly reduced their short positions against the yen, marking the most substantial cut in more than a decade following suspected market interventions by Japanese authorities to strengthen the currency, according to a report by Bloomberg.
The report cites data from the Commodity Futures Trading Commission in revealing that leveraged funds reduced their net short positions on the yen by 38,025 contracts during the week ending 16 July, the largest reduction since March 2011. Despite the cut though, hedge funds remain bearish overall on the currency with a net 76,588 short contracts.
The retreat by hedge funds came after the Japanese government reportedly spent JPY5.64tn ($35.8bn) over two sessions to support the currency from near its weakest levels seen since the 1980s permuting a rebound against the dollar to the highest level seen since early June last year.
The yen’s recent strengthening also stems from increased expectations of a Federal Reserve interest rate cut in September and critical comments from Donald Trump regarding the yen’s weakness.
