Japan's Mrs Watanabes, the shorthand name for the large number of Japanese retail investors, are being restricted in the amount they can borrow to finance their bets in the currency markets, in a move by the Japanese regulator to eliminate what it sees as excessive speculation by inexperienced traders.

The new rule on margin trading, which came into effect yesterday, limits the amount that retail traders can borrow to 50 times the amount of collateral used. From next year, rules will be tightened further to lower the limit to 25 times. There were no limits imposed before.

The Mrs Watanabes of Japan, ranging from the stereotypical housewives who control the family's finances to businessmen trading in their lunch breaks, are a significant force in the market. Rock-bottom interest rates at home over the best part of a decade have prompted them to play the currency markets in search of higher returns. Rough estimates suggest they can account for as much as 20-30 per cent of the volume of the Tokyo spot currency market.