Those bets are expected to ramp up next year, driven by wide gaps in interest rates, higher government borrowing in the US and low volatility in currency markets. These conditions make it more attractive to borrow in Japan and then deploy the funds in higher yielding markets around the world.
The yen carry trade — an investment strategy that blew up in spectacular fashion this year — is regaining popularity.
Japanese retail investors as well as leveraged funds and asset managers outside the country are estimated to have boosted bearish wagers on the yen to US$13.5 billion ($18.19 billion) in November from US$9.74 billion in October, according to Bloomberg’s analysis of data from the Financial Futures Association of Japan, Tokyo Financial Exchange and the US Commodity Futures Trading Commission.
