About this work
Heavy speculative positions against the yen created the risk of a sharp reversal in July 2022. The assessment argues that rising recession fears could reduce expected monetary tightening abroad and shift interest rate differentials in Japan’s favor. Markets had yet to price that change, leaving the currency vulnerable to disorderly appreciation if recession concerns intensified.
Abstract
Heavy speculative positions against the yen created the risk of a sharp reversal in July 2022. The assessment argues that rising recession fears could reduce expected monetary tightening abroad and shift interest rate differentials in Japan’s favor. Markets had yet to price that change, leaving the currency vulnerable to disorderly appreciation if recession concerns intensified.
Cite this work
Robin Brooks, Jonathan Fortun, Jonathan Pingle (2022). Global Macro Views: Japanese Yen Strength. Institute of International Finance.