Yen Breaks Key Barrier as Carry Trades Collapse

The yen has made a surprising surge past 152, breaking through the 155 intervention barrier and triggering a massive unwind of carry trades.

Over the past six months, shorting the yen and buying high-yield currencies was the most crowded trade in the market. Hedge funds kept shorting, betting that 'the Bank of Japan wouldn't dare raise rates.'

However, comments from US Treasury Secretary Bessent, Japanese and US interventions, and rumors of GPIF buying Japanese bonds have all hit at once, turning yen shorts into trapped beasts overnight.

The yen has seen a significant appreciation against the Hong Kong dollar, with its value increasing from HKD 4.8 to HKD 5.12 in just a month.