Japan’s Retail Currency Traders Set Record for Yen Transactions

Japan’s army of retail currency traders has set an annual record for transaction volume with a month to spare, as gains in the yen and working from home spur activity.

Trading volume in retail currency margin accounts reached 5,822.7 trillion yen ($56 trillion) in the first 11 months of 2020, surpassing the previous full-year record of 5,570.5 trillion yen in 2015,data from the Financial Futures Association of Japan show. The volume rose by 69% from the full 12 months of 2019.

“The number of investors opening up new forex accounts increased sharply between February and April,” said Toshiya Yamauchi, chief manager for foreign-exchange margin trading at Ueda Harlow Ltd. in Tokyo. The yen’s strength and the chance to trade more while working from home fueled the move, he said.

The dollar-yen rate has moved in an 11.04 point range of 101.19 to 112.23 so far this year, up from a 7.94 point range in 2019. The yen has advanced more than 4% against the greenback in 2020.

“Trading volume has stayed high throughout 2020, even after the dollar-yen turned less volatile in the later part of the year,” said Takuya Kanda, general manager at Gaitame.com Research Institute Ltd. Retail investors have been flexible and turned more of their attention to the yen versus currencies like the pound and the Australian dollar when they provided more volatility, he said.

The open interest in retail currency margin trading at the end of November climbed to a record 7.65 trillion yen, the most in data from the association going back to 2008.

“Retail investors tend to enter the market by taking fresh longs in the dollar or other currencies, especially when the yen appreciates,” said Masakazu Satou, a currency adviser at retail FX brokerage Gaitame Online Co. “They are key sellers of the yen, lending support to other currencies, during Tokyo trading hours.”

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