Amidst a chorus of bearish voices, the "50 cent" trader takes a bold bet on the "surge of the Japanese yen".

Wall Street is divided over the future trend of the Japanese yen. Amid the bearish sentiment from investment banks such as Goldman Sachs, Mizuho, and JPMorgan, the once-famous "50-cent" VIX trader has been calling for a sharp rise in the yen. Jonathan Ruffer, the fund manager at Ruffer Capital, a UK investment firm, made headlines for his successful bet on VIX call options at around 50 cents, earning $2.6 billion during the market crash in March 2020. In his latest letter to investors on October 16, Ruffer stated that the company holds a "significant position" in the yen and is betting on a sharp rise in the currency: "For currencies, it is always risky to try to predict a change in direction, even if fundamental factors influence the future trend of the yen. Our approach carries risks as well. However, we believe that due to technical reasons, the yen is oversold, and when fundamental factors stabilize, the yen is likely to experience an 'uncontrollable surge.' This situation occurred in 2008, which was favorable for us. We believe that the current backdrop will lead to a similar surge as in 2008." This week, the yen briefly fell below the key level of 150 against the US dollar, facing downward pressure once again due to the continuous widening of the interest rate differential between Japan and the US. Since the beginning of this year, the yen has depreciated by more than 12% against the US dollar. The media has reported that the yen is not only the worst-performing currency among major economies in 2023 but also the worst-performing currency among all the currencies tracked by Bloomberg. Goldman Sachs, Mizuho, JPMorgan, and Bank of America all believe that the yen will continue to fall to its lowest level in over 30 years. According to data from the CFTC, hedge funds have been heavily shorting the yen since the beginning of 2021. However, the median of institutional exchange rate forecasts surveyed by Bloomberg shows that the yen is expected to rise to 140 yen per US dollar in the first quarter of next year and to 130 yen per US dollar by the end of 2024. The market's divergence in yen forecasts is the largest in seven years. A previous analysis by Wall Street Journal pointed out that the main disagreement on Wall Street lies in the impact of the US economic outlook on the US dollar and the timing of the Bank of Japan's yield curve control policy (YCC). However, Ruffer believes that we should not think from a fundamental perspective. He believes that both domestic and international factors in Japan will force investors to buy a large amount of yen, which may trigger a significant rebound in the yen: "We do not believe that the appreciation of the yen is solely due to its undervaluation relative to other currencies, as weak currencies tend to continue to weaken. We are focused on two major technical forces in Japan, domestic and international factors. The first major force is domestic factors in Japan. The Bank of Japan is trying to suppress Japanese government bond yields, keeping them far below international levels, which is unsustainable. To address this issue, domestic institutions in Japan may be forced to buy a large amount of Japanese bonds and sell their foreign bonds to convert them into yen, thereby pushing up the yen. The second major force is international factors. Many overseas investors have previously bought assets in other countries using yen. This has caused a mismatch between the yen and currency assets. If the yen starts to rise in the future, these investors may be forced to sell a large amount of assets to repay their yen-denominated debts, which will also push up the yen."