Japan’s Life Insurers Cut Yen Hedges on Gradual BOJ Hikes View

Japan’s major life insurance companies are positioned for a weaker yen as they slash hedges that protect against currency appreciation to the lowest levels in over a decade.

Nine life insurers collectively cut bullish yen wagers tied to their foreign securities holdings to a 13-year low of 45.2% at the end of September from 47% six months earlier, according to a Bloomberg analysis of their earnings reports.

While the wide gulf between interest rates in Japan and the US support this stance for now, any abrupt narrowing of the gap would likely boost the yen, leaving these insurers exposed. This ...