(Bloomberg) -- The market is jittery about a big increase in volatility in the yen as a slump in the currency to the lowest since 1986 raises the specter of Japanese intervention.

Volatility spreads show that investors are demanding a premium to guard against sudden moves, bearish yen wagers are piling up, and a measure of active trader positioning is at its most negative since 2022.    

Warnings from Japanese authorities are unlikely to prevent the yen from weakening further, which increases the risk they’ll have to act on their threats to step into the markets, Carol Kong, a currency strategist at Commonwealth Bank of Australia, wrote in a research note this week. 

The nation’s top currency official, Masato Kanda, has said that Japan stands ready to intervene 24 hours a day if needed. 

These three charts expose the pressure on the yen:

While implied volatility in the yen appears subdued, its spread over fluctuations in other currencies is sticking above the average seen since the start of 2021.

Read: Yen’s Relentless Drop Showcases Fed’s Grip on Global Markets

Hedge funds and asset managers collectively held bearish yen wagers worth about $14 billion as of June 18, according to latest data available from the Commodity Futures Trading Commission. That’s more than other major currencies, and compared with euro net longs worth $32.7 billion.

A gauge of active trader positioning in the yen from Citigroup Inc. has fallen to the most negative since 2022, after a surge in short bets on the currency. While this shows traders remain firmly bearish, it also suggests there are plenty of positions that may need to be quickly unwound should the currency suddenly strengthen.

The effects of the ¥9.8 trillion ($62 billion) that Japan spent on FX intercession earlier this year have already worn off. Individual investors are looking for another opportunity to sell the yen if Japan’s currency rises after another round of intervention, said Hideki Shibata, a senior strategist at Tokai Tokyo Intelligence Lab. 

Read: Japan’s Retail Investors Eye Risky Wagers on Yen Intervention

©2024 Bloomberg L.P.