Hedge funds pile into yen puts as ¥150 target nears

Macro hedge funds have increased bets that the yen will strengthen beyond ¥150 against the dollar by year-end, with put option volumes across dollar-yen contracts expiring before 2026 running more than three times those of calls. A November put with a JPY142.86 strike was the most actively traded contract.

Dollar-yen traded around ¥153.47 in late-morning Hong Kong trade, about 0.3% weaker for the dollar. The pair fell almost 5% in the week through Tuesday before recovering some ground, a decline linked to unwindings of yen-funded carry trades.

The surge in demand for downside options followed hawkish comments from Bank of Japan Governor Kazuo Ueda and board member Hajime Takata and a break below the JPY155 level, a support point for traders. Japanese authorities carried out official intervention earlier this year, and the prospect of further policy measures has shaped hedging and speculative flows.

Macro funds are taking short-dollar exposures by buying puts and are also building longer-dated positions that would pay off if the yen moved toward JPY140. Traders use near-term puts for protection or quick payoff and longer-dated options to cover the possibility of sustained yen strength.

Financial firms report rising client interest in protective options. Nomura reported a sharp increase in demand for options that protect against a weaker dollar, with short positions accumulating after the break through JPY155. U.S. Treasury Secretary Scott Bessent warned investors against betting against policy efforts to support a stronger yen.

Traders say the coming weeks will be important to determine whether heightened put buying helps stabilise the currency or precedes further volatility.