Net short positions in the dollar held by Japanese retail investors rose more
than fourfold month-on-month to 2.79 trillion yen (~$17.2 bln) last month, the
highest level on record since 2008, the Japan Financial Futures Association
said. The surge in retail dollar shorts — retail traders dominate Tokyo spot FX
flows — could reduce the impact of Ministry of Finance intervention aimed at
strengthening the yen, because large retail positions would likely be unwound by
selling yen when authorities enter the market. Hideki Shibata, a senior rates
and FX strategist at Tokai Tokyo Research Laboratory, said such retail sell-offs
of yen to cover positions can drive USD/JPY in the opposite direction. Local
importers waiting to buy dollars at lower levels could further limit the MOF’s
willingness or effectiveness to intervene.
