(Bloomberg) -- Hedge funds boosted bearish yen wagers to the highest level since April 2022 last week amid speculation a recent rebound in the currency will be short-lived.

Leveraged funds’ net yen shorts increased by 2,833 to 65,611 contracts as of Nov. 28, according to the latest data from the Commodity Futures Trading Commission. Japan’s currency appreciated almost 4% from a recent low of 151.91 per dollar set on Nov. 13 to 146.23 on Monday, the strongest since mid-September.

“Views of persistent yen weakness are widely shared among overseas investors, and that’s consistent with the recent increase in leveraged funds’ net yen shorts,” said Fukuhiro Ezawa, head of financial markets in Tokyo at Standard Chartered Bank. “The currency weakness is ascribed to the fact that the absolute difference in yields between Japan and other economies remains wide.”

The bets from hedge funds add to signs that investors see yen weakness becoming more entrenched, even though overnight-indexed swaps are pricing in an end to the Bank of Japan’s negative-rate policy by June. Japanese life insurers have recently cut currency hedging by the most in more than a decade, signaling receding concern of a rebound in the yen that would wipe out returns from overseas assets.

Still, a continued decline in Treasury yields would narrow rate differentials between the US and Japan, which could in turn squeeze yen short sellers out of their positions.

“Overall the market is still seemingly short yen, and now as USD/JPY breaks below key support levels, shorts will be tested,” said Rodrigo Catril, a senior currency strategist at National Australia Bank Ltd. in Sydney. “The path of least resistance now seems 145.”

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