From Deutsche Bank
By late 2015, as the recycling of Japan’s growing Current Account surplus via the GPIF slowed and the pension fund approached foreign asset benchmarks, the upward impetus on USD/JPY turned. Thereafter a modest downward shift in spot, snowballed into a sequence of hedging related buying of JPY to cover short yen, long foreign currency exposure, built up over the prior 4 years. Initially foreign investors of Japan equities aggressively unwound their short yen QQE currency position. More belatedly, Japanese life insurance and pension funds are adding to their hedge ratios on foreign assets, and are likely to continue to sell USD/JPY upticks.
