Every intervention to support the yen also creates new opportunities to sell the yen. The historic joint action taken by the US and Japan last month had little effect on reversing the factors that put pressure on the yen. Less than two weeks later, the exchange rate of the yen fell again to the 160 mark against the US dollar. The point is that the interest rate gap between Japan and other countries is huge. Investors can borrow low-yielding yen and use that money to buy higher-yielding assets — this strategy is known as arbitrage trading. This means that when interventions push up the yen, investors can sell the yen at a better price. According to market observers such as J.P. Morgan Chase Private Bank and State Street Bank and Trust Company, as of August 4, hedge funds had cut their bearish yen bets in half, but some investors are beginning to return to arbitrage trading using yen as a source of capital. Among them is Ashwin Binwani, founder of the private equity firm Alpha Binwani Capital. He bought the US dollar at about 157 o'clock against the yen. As the yen weakened, this position made a profit. The USD/JPY pair is currently trading at 159.46. “The intervention provided an excellent opportunity to sell the yen at a higher level,” Binwani said. “We're not afraid of their actions. The arbitrage trading opportunity is great and not to be missed.”

Every intervention to support the yen also creates new opportunities to sell the yen. The historic joint action taken by the US and Japan last month had little effect on reversing the factors that put pressure on the yen. Less than two weeks later, the exchange rate of the yen fell again to the 160 mark against the US dollar. The point is that the interest rate gap between Japan and other countries is huge. Investors can borrow low-yielding yen and use that money to buy higher-yielding assets — this strategy is known as arbitrage trading. This means that when interventions push up the yen, investors can sell the yen at a better price. According to market observers such as J.P. Morgan Chase Private Bank and State Street Bank and Trust Company, as of August 4, hedge funds had cut their bearish yen bets in half, but some investors are beginning to return to arbitrage trading using yen as a source of capital. Among them is Ashwin Binwani, founder of the private equity firm Alpha Binwani Capital. He bought the US dollar at about 157 o'clock against the yen. As the yen weakened, this position made a profit. The USD/JPY pair is currently trading at 159.46. “The intervention provided an excellent opportunity to sell the yen at a higher level,” Binwani said. “We're not afraid of their actions. The arbitrage trading opportunity is great and not to be missed.”