A rush to unwind yen-funded carry trades helped send the currency to a one-month high against the dollar as traders ramped up bets on further Bank of Japan rate hikes. The yen held gains Friday after advancing more than 2% on Thursday, nearing levels last seen in May following the Ministry of Finance intervention. The move came after hawkish comments from BOJ Governor Kazuo Ueda and board member Hajime Takata earlier this week who raised the possibility of an outsized rate increase at the central bank’s Sept. 18 meeting. Trading in yen call options against the dollar expiring this month was more than two-and-a-half times the volume of puts on Thursday, according to Chicago Mercantile Exchange data, as traders unwound existing short yen positions.

“We’re seeing unwinds of yen-funded carry trades and significant interest to own the yen over other G10 currencies in the medium term,” said Sagar Sambrani, a senior foreign-exchange options trader at Nomura in London. Two-year yields have jumped about 14 basis points this week, while swap traders have priced in a quarter-point increase at the Sept. 18 meeting, and nearly three additional moves of the same size by July.

High yielding currencies such as the Brazilian real, South African rand and Mexican peso all fell more than 1% versus the yen. Leveraged funds held a net short yen position of 81,619 contracts in the week ended Aug. 25, while asset managers were short 18,284 contracts, according to the latest Commodity Futures Trading Commission data. Japanese exporters have also stepped up sales of dollars for yen, adding to the currency’s advance.

“Rather than activity from any single corner of the market, the move in dollar-yen appears to reflect a broader reallocation of risk,” said Ivan Stamenovic, head of Asia-Pacific Group-of-10 currency trading at Bank of America in Hong Kong. The driver was the unwind of yen short position — mainly hedge fund accounts, according to Masayuki Nakajima, senior strategist at Mizuho in London.