The Japanese yen has fallen sharply in recent weeks, hitting levels not seen since before a sudden surge in the summer that reverberated across global markets.
The yen last week sank below ￥150 to the US dollar, and has lost about 5 per cent over the past month as investors bet on a slower pace of interest rate rises from the Bank of Japan, at a time when the US Federal Reserve is also expected to cut rates more slowly than previously thought. Dovish comments from Japan’s new prime minister, who had previously been critical of the BoJ’s very loose monetary policy, have helped the currency resume a slide that carried it to 34-year lows earlier in the year.
The shift, investors said, has rekindled interest in the so-called yen carry trade, where investors borrow in yen to fund bets in higher-yielding currencies, a bet that blew up spectacularly in August after the BoJ raised borrowing costs.