Yen Carry Traders Cheer on Ueda’s Softly-Softly Approach to BOJ

Bank of Japan Governor Kazuo Ueda’s dovish stance has cemented the yen’s status as the most attractive funding currency for carry traders, a factor which is helping add to its weakening trend.

Thanks to the BOJ’s negative-rate policy, the yen stands alone in terms of low implied yield — a gauge of funding costs — with a three-month rate of minus 0.4% compared to the 30 other currencies analyzed by Bloomberg which have yields above zero. That’s about 180 basis points below the Swiss franc, another popular funding currency.