(Bloomberg) -- The world and its mother is convinced Japan’s currency is going to strengthen -- it’s just that nobody seems to have taken the time to tell the still-weakening yen.

Citigroup Inc.’s gauge of trader positioning, the FX PAIN JPY Index, climbed to the highest since October 2015 last week, suggesting funds have continued to load up on the Japanese currency. Yet the yen has weakened more than 5 percent since the Jan. 3 flash crash, as a rally in global equities sapped demand for haven assets.

It’s hard to blame yen bulls. Almost everyone from strategists to economists to fund managers continue to push out yen positive commentary. Credit Agricole CIB said last week it is time for clients to buy, while Dai-ichi Life Insurance Co., one of the Japan’s biggest insurers, is already adjusting portfolios in anticipation of strength. Goldman Sachs Group Inc. said the currency may surge to 60 per dollar in the next crisis, from the 111.80 level it traded at Friday.

Even Bank of Japan Governor Haruhiko Kuroda was obliged to comment on the implications of a stronger yen for central bank policy, after a number of former officials warned about its rise.

Weakness Mild

But the currency just refuses to appreciate, falling to its lowest since late December on Friday. A dovish pivot from many of the world’s central banks and some signs of progress in the ongoing U.S.-China trade dispute have bolstered a rally in risk assets.

“If there are a few more warning signs around the economic environment or risk sentiment, then I’m quite happy to build more longs at these levels,” said Stuart Simmons, Brisbane-based senior portfolio manager at QIC Ltd, who has taken a “cautious” long position in the currency. The A$85 billion ($60 billion) asset manager sees the yen’s weakness as mild given the surge in stocks, which is “actually quite encouraging.”

Economists forecast Japan’s currency to strengthen to 108 per dollar by the year-end, about a 3 percent rise, according to their estimates compiled by Bloomberg.

Real Yields

For Minori Uchida, Tokyo-based head of global market research at MUFG Bank Ltd., the yen has been closely tracking real yields, which have been ticking lower this year. However, Japan’s plan to raise sales taxes in October will hurt the economy and dampen inflation expectations, boosting real yields and the currency, he said.

“Deflation will start to emerge, and I’m seeing the yen getting quite strong this year,” he said.

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