Last week, the Japanese Yen reached levels of volatility not seen in years, as a sell-off in Asian capital markets spread to forex markets, and nervous investors began to unwind carry trade positions in the Japanese Yen. The Yen spiked almost 3% in an instant, and many analysts feared a Yen appreciation on a scale comparable to 1998, when the Yen appreciated by almost 15% in two days. This time around, the Yen failed to maintain its upward momentum, and soothed investors began to rebuild their short positions in the Yen, driving it back towards its earlier value. The Financial Times reports:

Currency flow data showed that institutional investors had amassed massive short yen positions in the last six months at an average rate of about Y119.70 against the dollar. At the current rate, they would take until April 30 to be squared.

Read More: Calm returns to currencies after a volatile week