Hedge funds look to have pulled back from their most bullish yen bets but are still paying high prices to hedge positions at current levels, a sign of increased uncertainty as to where the currency will go next.
Dovish comments by Bank of Japan Deputy Governor Shinichi Uchida Wednesday brought the relative cost of hedging yen gains over the next month about a third lower, according to Ruchir Sharma, London based global head of FX option trading at Nomura International PLC. But notably pricing for hedges close to where the forward market was remained elevated, even as the currency itself fell, he said.