Dollar-yen briefly fell to ¥156.38 as month-end and quarter-end fund flows continued, but recovered to around ¥157. Selling by US-based funds was also reported in the market, and short covering is believed to be under way.
Amid continued month-end and quarter-end fund flows, dollar-yen temporarily fell. During trading hours, it briefly plunged to ¥156.38, but the trend subsequently reversed as the flow subsided, prompting a rebound to around ¥157.
Information has emerged from market participants that selling by US-based funds was observed. This has been cited as a factor behind the initial decline, while buying to cover short positions may have come in, prompting the unwinding of short positions.
Combined with increased trading activity at month-end and quarter-end, the current move is producing short-term volatility. Going forward, the pair may fluctuate in either direction depending on whether the flow recurs and on fund activity.
Many market participants view this move as limited to an instantaneous fluctuation in a particular currency pair, and no information suggesting a long-term trend reversal has emerged at this point. The market continues to monitor macroeconomic developments and fund flows.