Yen Hedging Costs Hit Two-Year High as BOJ Meeting and Intervention Risks Loom

According to Jin10, on June 4, option traders ramped up hedges against sharp yen swings, with two-week USD/JPY butterfly spreads reaching their highest levels since October 2022. The spike reflects market concerns over potential Bank of Japan intervention to support the yen and the central bank's June 15-16 policy meeting, as USD/JPY tests the 160 level. Singapore Overseas Chinese Banking Corp strategist Moh Siong Sim noted that intervention risk remains the key focus, given the currency pair's proximity to the 160 mark and the widening U.S.-Japan interest rate differential.
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