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Hedge Funds Yen

Hedge Funds Yen

Some Hedge Funds Are Less Bearish on Yen

Hedge funds are more optimistic on Yen, even though there is a looming possibility of an intervention by the Japanese government. Comments made by Japan's finance minister, Yoshihiko Noda, have made it seem more likely that the government will intervene to curb the currency's strength. Still, some big hedge funds are less bearish about the currency.
On Tuesday, Japan's finance minister, Yoshihiko Noda, fueled concerns about intervention by saying he is watching the currency markets closely, as the dollar hit one-month lows near Y80, a key test of Japanese authorities' tolerance.

Yet Daniel J. Arbess, who manages the $3 billion Xerion strategy at Perella Weinberg Partners, recently dumped his bet against the yen. For months, the New York-based fund had sold the yen and bought currencies of stronger, less indebted economies like Canada and Norway.

While Arbess remains bearish on Japan, he says there is too much uncertainty and volatility in markets right now to make that yen trade appealing.

"I don't think there's a tremendously compelling opportunity right now," he says, adding that "we're in a no-man's land" when it comes to the chances of Japanese authorities intervening to curb the strong currency, which is hurting the ability of Japanese firms to sell their goods abroad.

Other hedge funds also seem to be cutting back on bearish yen trades, though most speculative investors remain positioned to profit from future yen weakness. "People are giving up," says Morgan Stanley foreign-exchange analyst Ron Leven. Source

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