Another asset management giant is bullish on the Japanese Yen: Next year, the Bank of Japan's interest rate hike will push the Yen against the US Dollar to around 130
Mark Nash from Jupiter Asset Management, a top global asset management institution, is bullish on the Japanese Yen. He predicts that the Bank of Japan will raise interest rates in 2025, pushing the Yen against the US Dollar to around 130. Nash's fund has increased its bet on the Yen against the Dollar to a risk exposure of 15%. He also favors 10-year Japanese government bonds and believes that high-yield arbitrage trades have significantly decreased. Currently, the Yen is trading around 145.09 against the US Dollar
According to the Zhitong Finance and Economics APP, Mark Nash of the top global asset management institution Jupiter Asset Management has increased his bets on the strengthening of the Japanese yen because he believes that the Bank of Japan is likely to raise interest rates in 2025.
Nash stated: "We can now see that Japan's pricing is too low, and the real interest rates in the United States are too high. This is almost a perfect trade, benefiting both sides." It is understood that Nash's absolute return bond strategy has outperformed nearly 90% of his peers over the past five years.
Betting on the strengthening of the Japanese yen is now the largest currency position in Nash's fund, accounting for about 15% of his risk exposure. The London-based fund management company increased its bets on the strengthening of the Japanese yen on Monday, while also buying the yen against the Swiss franc, Australian dollar, and New Zealand dollar.
Nash's views also echo those expressed earlier by Vanguard and RBC BlueBay Asset Management, suggesting that Japan's borrowing costs may rise—this expectation stands out particularly as market expectations for further tightening this year have fallen sharply. Correctly assessing the yen exchange rate has never been as crucial as it is now: traders had placed bets worth billions of dollars on the yen depreciating, only to see the yen exchange rate soar in early August and destroy their positions.
The fund manager believes that with the Bank of Japan "raising rates to 1% at some point, possibly increasing rates quarterly next year," the yen to dollar exchange rate could rise to around 130. As of the time of writing, the yen to dollar exchange rate is hovering around 145.09 yen to 1 dollar.
Nash has also increased his bearish bets on 10-year Japanese government bonds to reflect his view that rates will rise. He is bullish on the country's 30-year sovereign bonds.
He estimates that a large number of high-risk arbitrage trades involving borrowing yen to invest in high-yield assets have been eliminated. Data from the U.S. Commodity Futures Trading Commission shows that hedge funds, as the main participants in trading, have turned bullish on the yen for the first time since 2021 in the week ending August 13.
Nash said: "We do believe that the situation has changed, so don't get involved in arbitrage trades anymore. Japan's policies are wrong, so it makes sense for the yen to return."