Despite strengthening this year, the Japanese yen still faces downward pressure as the government combats the persistent slow growth and deflationary environment. Currency traders can utilize inverse yen exchange traded funds to hedge against short-term dips.

The CurrencyShares Japanese Yen Trust (NYSEArca: FXY) has gained 3.7% and ProShares Ultra Yen (NYSEArca: YCL), which tries to reflect the daily 2x or 200% daily return of the the U.S. dollar price of the yen, increased 7.0% year-to-date.

Meanwhile, the ProShares UltraShort Yen (NYSEArca: YCS), which tries to reflect the daily -2x or -200% daily return of the U.S. dollar price of the yen, declined 8.5% so far this year.

Speculators are still shorting the yen, with a net $8 billion in bearish bets against the yen, reports Sara Eisen for CNBC. The only currency people are more bearish on is the euro.

The U.S. dollar is currently trading around 101.55 to the yen.

Traders are betting that the Bank of Japan will augment its monetary stimulus measures as growth slows and Prime Minister Shinzo Abe is pressured to take aggressive action against low growth and the stubbornly low inflation. [Japanese Yen ETF: BOJ Governor Sees No Reason for Strong Currency]

Haruhiko Kuroda, governor of the Bank of Japan, has funneled 60 trillion yen, or $587 billion, to 70 trillion yen into the economy each year through quantitative easing. At this week’s meeting, market observers anticipate the BOJ to continue its bond purchasing program.

“If BOJ Governor Kuroda provides a less optimistic read on the economy and acknowledges that outcomes are worse than expected, the odds of an ease go up, as well as the risk that it occurs sooner than later, so the Japanese yen weakens,” Steven Englander, chief FX strategist at Citigroup, said in the article.

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