Lates News

J.P. Morgan warned that foreign investors may increase the forex hedging ratio for buying Japanese stocks, which could lead to a selling of the yen. It stated that foreign investors have been buying a large amount of Japanese stocks over the past few quarters, but the forex hedging ratio has remained at a low level of around 10-20%. With the recent rise in Japanese stocks, if more traditional medium to long-term investors return to hedged Japanese stock funds, this ratio could increase, becoming an overlooked catalyst for yen weakness. If the forex hedging ratio normalizes and increases by 1%, it could trigger around 3 trillion yen in USD/JPY buying or push USD/JPY up by 2.8.