A Japan whose competitiveness is waning becomes an alluring target, and short-sellers are expected to also set their sights on economies such as India and Indonesia.
Japan is unable to sharply increase interest rates to protect its currency because of its substantial national debt. This situation could trigger an inflation-devaluation spiral, yielding significant gains for those betting against the yen.
The yen has once again surpassed 160 against the US dollar, just one month following a major government intervention. Japan’s foreign exchange reserves exceed US$1.3 trillion, yet subsequent interventions will incur higher costs and prove less effective, enabling short-sellers to expand their positions.