That’s the largest change in weekly net positioning in the yen by leveraged funds since March 2011, LSEG data showed.
“This week marked the culmination of the largest yen short squeeze in 17 years, with leveraged funds and other speculators unwinding bets against the currency at the fastest monthly pace since August 2007,” said Karl Schamotta, chief market strategist at payments company Corpay.
“To paraphrase Mike Tyson, everyone has a plan until the yen punches them in the mouth,” he said, referring to the American boxer.
Global stock and bond markets, in particular Japan’s, were rocked this week by an unwinding of the hugely popular yen carry trade.
That trade, which involves borrowing yen at a low cost to invest in other currencies and assets offering higher yields, is being wrecked by Japan’s rate increases, a volatile yen and imminent rate cuts in the United States and other economies.
The U.S. dollar has fallen 9% against the yen over the past month.