A once-popular currency trade betting against the yen looks set to make a comeback, as Sanae Takaichi’s near-certain elevation to Japan’s premiership raises the prospect of slower interest-rate hikes.
Japan’s currency dropped against all of its major peers on Monday, as investors wagered that Takaichi’s pro-stimulus stance would result in a slower timeline for the Bank of Japan’s policy tightening. Delayed hikes could well tempt traders back into a strategy known as the carry trade, where they borrow the low-yielding yen and buy currencies such as the Brazilian real or Australian dollar that offer higher returns.