UBS Asset Management’s Zhao ready to sell yen if Japan intervenes again

Japan’s central bank raised interest rates to their highest level since 1995 last week, and one prominent fund manager’s takeaway was essentially: thanks for the discount. Kevin Zhao, a portfolio manager at UBS Asset Management, said any further intervention by Japanese authorities to prop up the yen would offer a good opportunity to sell the currency. His reasoning: the Bank of Japan’s September 18 rate hike doesn’t signal a genuinely hawkish turn, which means the yen’s structural weakness isn’t going away anytime soon. A rate hike that didn’t convince The BOJ lifted its policy rate by 25 basis points to 1.25%, the first increase in three months. At 1.25%, Japan’s benchmark rate sits at a level not seen since April 1995. But the vote told a different story. The decision passed 7-2, with policymakers Toichiro Asada and Ayano Sato dissenting. Governor Kazuo Ueda’s post-decision messaging was characteristically cautious, reinforcing the impression that this was a reluctant step rather than the start of an aggressive tightening cycle. The yen responded accordingly, depreciating sharply in the sessions following the announcement and trading in the 157-159 range against the dollar. Japa...