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Michael Burry, known for his role in “The Big Short,” posted on his Substack that the Japanese yen is long overdue for a trend reversal, according to a MarketWatch report. He warned that the consequences would include repatriation of funds chasing higher rates back to Japan, representing a significant change in investment flows. The comments come as the yen has shown volatility amid repeated interventions by Japanese authorities this year.
Japan spent a record 11.7 trillion yen on currency intervention during April and May, Reuters reported, as officials sought to counter excessive weakness in the currency. Analysts have increasingly viewed the 163-165 yen per dollar zone as the next potential threshold for action, according to a State Street Global Markets assessment. Finance Minister Satsuki Katayama stated that the government remained prepared to take decisive steps against speculative moves, as confirmed in coordination with the United States.
The yen posted its biggest one-day gain since April on July 30 after the Nikkei newspaper cited evidence of renewed official intervention in the market, Bloomberg figures show. Such sudden spikes have occurred multiple times in thin trading sessions, with one jump on May 1 pushing the dollar-yen rate from around 158 to 155.60 in a short period, Finimize data indicated. Traders continue to monitor for signs of further buying by Tokyo even as underlying interest rate differentials favor the dollar.
Eurizon SLJ Capital chief executive Stephen Jen described recent US-Japan efforts to support the yen as a watershed moment that would prevent a slide back to four-decade lows, in a note to clients. Jen and portfolio manager Joana Freire wrote that dollar-yen had most likely peaked because neither government would concede to market pressures. The assessment aligns with broader warnings from Japan’s top currency diplomat about speculative activity in foreign exchange.
Morgan Stanley chief US equity strategist Michael Wilson told clients after a visit to Japan that local investors anticipated the yen trading toward 140-145 at a minimum, according to the firm’s research note. Wilson’s team calculated that fair value for dollar-yen based on terminal rate pricing sat closer to the 145 level. Such projections reflect expectations that yen strength could eventually support Japanese equities despite short-term volatility.
The Bank of Japan raised its benchmark interest rate to 1 percent in recent months, the highest level in more than three decades, central bank statements show. This policy shift has narrowed but not eliminated the yield gap with US rates that has fueled yen carry trades. Public Authority for Civil Information equivalents in economic data underscore how currency fluctuations affect Japan’s trade balance and imported energy costs.
Burry’s Substack post highlighted that a yen reversal would affect US stock investors through shifts in global capital flows, the MarketWatch article noted. He pointed to the currency’s sudden strength earlier this year as evidence that trends can change rapidly. Separate Bloomberg tallies place the yen’s weakest point against the dollar this year near 162.58, a level not seen since 1986.
