Tuesday, 22 July 2014
Last updated 6 hours ago
Feb 14 2013 | 12:55pm ET
Twenty-one years ago, George Soros "broke the pound" and earned a cool $1 billion betting against the British currency. He's done it again this year, with a big bet against the Japanese yen.
The yen has lost almost 20% against the dollar over the past four months. And Soros has turned a nearly $1 billion profit, shorting the currency since November.
And he's not alone: Some of the biggest hedge fund managers in the U.S. have turned tidy profits betting against the yen, including Greenlight Capital, Hayman Capital Management and Third Point, The Wall Street Journal reports.
Unlike when Soros sacked the pound in 1992, Japan is complicit in its currency's fall. Newly-elected Prime Minister Shinzo Abe pledged to weaken the yen during his election campaign, leading to what is now known as the "Abe trade."
Or, as someone close to Soros Fund Management told the Journal, "a bet on Abe-nomics."
It's unclear whether the bet has much longer to run. Abe has been criticized for starting a currency war by other members of the Group of Seven, including Germany and Japan, and he has now pledged some quantitative easing.
But Greenlight Capital's David Einhorn said the yen may still have farther to fall.
"We put the trades on about three years ago," he said, "and the trade wasn't fun for the first two years and a number of months."
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…