Australia's second-largest pension management agency, Australian Retirement Trust, has established the largest Japanese yen overbalance position in many years, betting that the market has underestimated the prospects of the Bank of Japan's interest rate hike. ART manages approximately $370 billion in pension savings. Jimmy Louca, the company's senior portfolio manager, said in an interview with Bloomberg News that as the yen fell to 160 against the US dollar, the fund increased its exposure to yen over the past six months, and part of the capital came from a reduction in the dollar allocation. At a time when many investors are seeking to short the yen, ART chose to buck the trend and go long. The yen hit a new low in about 40 years against the US dollar last month as traders bet that the Bank of Japan will not rush to raise interest rates in the face of high energy costs. Louca believes that the market is only half right, and the drag on the yen of rising energy prices has been fully measured, but expectations for the Bank of Japan's interest rate hike are still insufficient. “If these two factors are reversed, the yen should be supported,” Louca said. “We've now overmatched the yen, and the yen seems very cheap.”

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