(Bloomberg) — Hedge funds slashed their bets against the yen by most since March 2020 after Japanese authorities likely stepped into the market in a bid to prop up the currency.
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Those leveraged investors held more than 81,000 contracts tied to wagers that the yen will fall in the week ending Tuesday, marking a drop of nearly 27,000 from the week prior, according to data released Friday from the Commodity Futures Trading Commission. That’s the biggest decline since the coronavirus was shuttering cities more than four years ago.
The reduction in bearish bets comes after sharp jumps in the currency last week and movements of around ¥9.4 trillion ($60.3 billion) in the central bank’s accounts indicate that Japan likely intervened twice to prop up the yen.
The currency weakened more than 1.7% against the dollar over the past five days.
“Interventions flushed out short-term traders, but the broader market held on to Japanese yen shorts and was rewarded with a nice bounce,” said Brad Bechtel, global head of FX at Jefferies Financial Group Inc.
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