South Korea-listed yen ETFs lag as intervention fails to halt currency slide

South Korea-listed exchange-traded funds tied to the Japanese yen have remained under pressure as the currency stayed weak despite joint foreign-exchange intervention by U.S. and Japanese authorities. Data from Koscom ETF Check showed yen-linked products posted negative or materially weaker year-to-date returns than comparable funds without yen exposure, including S&P 500 and U.S. long-term Treasury products tracking the same underlying benchmarks. By contrast, inverse exchange-traded notes designed to benefit from a weaker yen outperformed. The dollar-yen rate rose to nearly 164 at the end of July, its highest intraday level since 1986, then retreated to the 155 range after the two countries bought yen before rebounding to the 159 range. Park Sang-hyun of iM Securities said additional intervention remains highly possible, helped by use of the Federal Reserve's FIMA repo facility (liquidity line for foreign central banks), but argued there are limits to defending the yen because of Japan's fiscal risks, the limited impact of further Bank of Japan rate hikes, and the prospect that the BOJ's tightening cycle is nearing an end.

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