The yen’s rally has led global investors to pare back their exchange rate risks, no longer expecting a rapid decline in the Japanese currency.
Expectations that the yen could rise further have prompted strategists at JPMorgan Chase & Co., UBS Group and BNP Paribas Asset Management to recommend unwinding currency hedges on Japanese stocks, which have outperformed many regional peers, boosting dollar returns.
“At this point, the advice is to invest in Japanese equities without hedging currency exposure to benefit from higher dollar returns from potential yen appreciation,” said Wei Li, a multiasset quant solutions portfolio manager at BNP Paribas Asset Management.
