During the yen's appreciation in September, hedge funds' increased yen buying may have had a greater effect than coordinated intervention. Reports examined the relationship and background involving the Japanese and US authorities and hedge funds.
According to publicly released materials, Japan's Ministry of Finance carried out US dollar-selling, yen-buying intervention over the 3 trading days of 30 and 31 July and 3 August. The yen temporarily appreciated to the ¥152 level in September, but it was reconfirmed that the authorities did not intervene.
The sharp expansion of hedge funds' yen-buying positions is said to have driven the US dollar's decline and the yen's appreciation. CFTC data shows that hedge funds had shifted to net yen buying by early September. The chart also illustrates this movement.
As the Japanese and US authorities repeatedly made statements aimed at correcting yen appreciation, it has been suggested that the background to hedge funds' shift to yen buying may have been their close relationship with Treasury Secretary Bessent, who is said to have come from the hedge fund industry. This may have raised the possibility of a strategy to bring hedge funds onto the authorities' side as an intervention option.
While the yen's appreciation in September remained around the ¥152 level, the US dollar has not yet risen above around ¥159 against the yen. Some reports suggest that hedge funds' loss avoidance could become a condition for intervention to resume. There has also been speculation that the Japanese and US authorities could resume intervention if the exchange rate remains above the 120-day moving average.