Investors Hold Yen Short Positions Despite BOJ Rate Hike Signals

Investors maintain bearish positions on the Japanese yen despite Bank of Japan Governor Kazuo Ueda's hints at potential rate increases, traders at Bank of America, Nomura Holdings, and RBC Capital Markets said on Dec. 8. Citigroup's "pain index" for the yen remains deeply negative, reflecting persistent market pessimism. Market participants continue shorting the yen due to expectations that Japanese yields will stay significantly below U.S. rates, even as reports indicate the BOJ is prepared to raise rates in December if conditions remain stable. Ivan Stamenovic, head of Asia-Pacific G-10 FX trading at Bank of America, said positions favor further USD/JPY gains through year-end unless the BOJ delivers a genuine surprise, noting that Ueda's hawkish remarks sparked discussions but failed to shift underlying sentiment.