Bloomberg Surveillance · Thursday, September 3, 2026
Jati Bhattacharya explains that if the Bank of Japan signals aggressive rate hikes, it could lead to a significant unwind of yen shorts, requiring a shift to other funding currencies. He suggests the Canadian dollar and Swiss franc as potential funders due to their central banks' less aggressive hiking stances. For longs, Bhattacharya advises caution on the Brazilian real due to upcoming elections but sees potential in the South African rand.
“So if BOJ starts signaling an aggressive path to hiking interest rates, we do think that potentially that needs to have a bigger unwind in the yen short.”
“We think the Canadian dollar could potentially be one funder, given that the Bank of Canada is the least likely to hike.”
“The South African rand is one which we've been flagging to clients for quite some time. I think there's still more room for the currency.”