One yard of one-year yen puts/dollar calls went through the London foreign exchange market last week. The options had strikes of JPY135-150 with one-year maturities, according to European-based traders and brokers. Proprietary traders were likely buying the options to hedge against a surprise tumble in the yen against the dollar, according to traders. The yen was trading at approximately JPY115 when these trades went through. David Bloom, foreign exchange strategist at HSBC in London, said if Japan decides to let its currency depreciate against the greenback in order to bring about an export-led economic recovery, then the JPY135 level could be reached. But with the U.S. facing its own growth problems, the U.S. may look to boost its exports and hence resist such a low exchange rate. HSBC's six-month forecast for the dollar is JPY107.
Traders Buy Dollar/Yen Protection
