News / Korea / yonhap_finance
Hyundai Motor Securities: Risk of Sudden Yen Carry Trade Unwind Remains Low
Finance · Investment Banks/Brokers · yonhap_finance · 2026-09-08
001500
Hyundai Motor Securities suggests that despite BOJ rate hike expectations, a sudden yen carry trade unwind is unlikely as the market has already priced it in.
What Happened
Yen Carry Trade Concerns: Concerns regarding the unwinding of yen carry trades have resurfaced due to expectations that the Bank of Japan (BOJ) will raise interest rates twice before the end of the year. Analysts note that the shift toward a stronger yen and tighter monetary policy in Japan has fueled market volatility fears.
Assessment of Unwind Risk: Hyundai Motor Securities researcher Kim Jae-seung argues that a sudden, chaotic liquidation similar to August 2024 is unlikely. The market has already largely priced in the anticipated BOJ rate hikes, reducing the potential for a surprise shock.
Positioning and Liquidity: Speculative net short positions on the yen have halved since July, suggesting that the risk of a massive 'short squeeze' triggering a sell-off in risk assets has significantly diminished. This reduction in leverage provides a buffer against extreme market reactions.
Interest Rate Differentials: The gradual pace of narrowing interest rate differentials between the U.S. and Japan is expected to keep market volatility in check. As long as the change in the rate gap remains moderate, it is unlikely to trigger a widespread sell-off of risk assets like U.S. stocks.