(Bloomberg) -- Hedge funds and asset managers were split on their yen views as the Bank of Japan laid the ground for an end to its negative-rate policy.

Leveraged funds cut net yen shorts to the lowest level since February 2023 in the seven days ended Jan. 23 when BOJ announced its last policy decision, according to a report from the Commodity Futures Trading Commission. In contrast, asset managers, such as pension funds and insurance companies, boosted net shorts by the most since May when the investors switched to shorts from longs.

Japan’s currency strengthened as much as 0.8% against the dollar before erasing the gain on Jan. 23 after Governor Kazuo Ueda said the certainty of the BOJ achieving its inflation projections has continued to increase gradually. The authority will avoid any big discontinuity when it lifts the negative-rate policy with measures including adjustments to other policy tools, the governor said.

“The reduction in yen shorts makes sense to price in normalization of BOJ policy and a resultant yen strength,” said Hirofumi Suzuki, chief foreign-exchange strategist at Sumitomo Mitsui Banking Corp. in Tokyo. “Asset managers could have interpreted Ueda’s discontinuity comments as saying that any rate hike will be slow paced and that gave the investors reassurance to sell the yen.”

Overnight-indexed swaps signaled a 70% chance that the central bank will abandon the sub-zero policy by April.

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