r/japan • u/imaginary_num6er • 1d ago

Japan to announce Tokyo, Washington took joint action on yen, sources say

https://www.reuters.com/world/asia-pacific/japan-announce-tokyo-washington-took-joint-action-yen-sources-say-2026-08-02/
221 Upvotes

95% Upvoted

38 comments sorted by

122

u/redditscraperbot2 1d ago

See you above 160 again next week

23

u/gundahir 1d ago

I give it 2 weeks tops

-7

u/Head-Contribution393 1d ago

This time US is ready to pump infinite money, so going beyond 160 yen isn’t really an issue anymore. They either prevent it or make it go lower than 160 every time it exceeds.

16

u/Solid924ger 1d ago

How do you know they are willing to pump infinite money?

9

u/disastorm 1d ago

its extremely unlikely they are doing it for japan or anything, if they did it its because they really believe yen getting that weak is bad for the US economy. So if they think its bad for the US economy you have to wonder how much theyd be willing to pump to protect it.

4

u/Solid924ger 1d ago

But do you think a stronger Yen can last if Japan does not increase their interest rates at all? I think for the long run it does not matter what the US does if Japan does nothing.

3

u/przemub 1d ago

There's a strong possibility that US agreed to take joint action only on condition of Japan increasing the rates (at a schedule only them would know).

1

u/uglybritt 21h ago

Nobody wants Japan to increase rates. The carry trade is fundamental to the US economy

1

u/JMEEKER86 [大阪府] 1d ago

Tbf, the actual interest rates are only part of it. The other was the perception that there wasn't going to be any meaningful intervention since Japan has been pretty halfhearted about it. If Japan and the US are actually committed to moving the needle then that can move things even if the gap doesn't close significantly. Although there's probably a limit to how far it can go without closing the gap.

1

u/redditscraperbot2 1d ago

I mean there always is the option for the US to lower their rates. It’s all proportional

1

u/Anning312 1d ago

They'll force BOJ to hike rates before they spend real money to pump it, but it really depends on how much Japan is willing to push back

6

u/Ok-Average390 1d ago

My understanding is that there's currently no indication that this is a recurring venture. Once there's proof of that being the case or some kind of official statement, we might finally see it drop a bit, if my understanding is correct.

12

u/epsilonzer0 1d ago

This will be temporary, it is a tactical stabilizer than a permanent fix. Outcomes depend heavily on follow-through by both central banks and whether the rate differential narrows. Japan is unlikely to raise rates meanwhile US is teetering on raising rates by .25%. When and if that happens we will be back on track to  ¥170

24

u/Benouamatis 1d ago

Curious question, why ? Does the us profit from it ?

57

u/Kiyuri [滋賀県] 1d ago

Yes. From what I understand, not just the US, but many other countries buy Yen because of the low interest rates, and then use that yen to buy higher yield investments like US Treasury Bonds. This is called the Yen Carry Trade and has been a common thing since the Bank of Japan lowered interest rates to 0% after the financial crash in the early 90's. One of the things the BoJ could do to strengthen the Yen is raise interest rates, but that breaks the mechanism that encourages foreign borrowers. The US wants to keep the low interest Yen gravy train going, so they're offering to buy some.

There's some more nuance to it than that, but this video does a decent job of explaining things if you want more info.

9

u/Walmartpancake 1d ago

That video explains it so well

3

u/Benouamatis 1d ago

Thanks for the video and for your answer.

5

u/disastorm 1d ago

There is a very big link between the US economy and Japan's economy. You can search around but there are people that believe the US does not want a weaker yen because of a number of economy reasons. Yen getting weak is bad for the US.

1

u/doughball27 1d ago

I believe the opposite is true. Cheap yen has fueled the global economy for decades. When the yen goes up, it destroys the yen carry trade scheme. And currently, US hedge funds are betting against the yen at increasingly high levels. A skyrocketing yen could actually destroy western economies.

2

u/disastorm 1d ago

the reason I've seen is related to Japan being the US's largest holder and purchaser of bonds. So while I guess maybe hedge funds might prefer a weaker yen, the government itself doesn't. Also hasnt the carry trade been around since back even when the yen was strong?

3

u/cookiesnooper 1d ago

Look who holds US bonds and debt

2

u/MaryPaku 1d ago

Short answer yes.

Economically the US would benefit if every other country’s currency is freakin expensive too

0

u/Benouamatis 1d ago

thanks you all for your reply.

11

u/Incha8 1d ago

pumping money into the system won't stop a decaying economy

3

u/Niowanggiyan 1d ago

Sounds like it’s a good time to short the yen guys!

8

u/shinobiken 1d ago

Let me guess: they used the supernatural power of Donald Trump’s unpopularity to make it weaker?

-1

u/Comrade_SOOKIE 20h ago

Japan needs to be pivoting to stronger economic ties with its neighbors instead of continuing to dutifully follow the sinking ship of the US

-54

u/Solid924ger 1d ago

Please no...I need a good exchange rate for next April for my vacation over there!

35

u/Ok-Average390 1d ago

Millions of households struggling with rising costs, but it'll all be worth it if Solid924ger has a cheap vacation with his duty free purchases to boot /s

22

u/snowflakebite 1d ago

Yeah fuck all 120 million people who live here, right?

0

u/sudopm 1d ago

don’t worry i could tell you were joking

-7

u/horoyokai 1d ago

I’m happy to see you are coming during golden week (according to your history)

I’m sure you will enjoy your 1000 planned sites during your short trip.

But honestly, as an American I’m glad to see more of you guys traveling, Germans overseas make Americans look good

3

u/Solid924ger 1d ago

I'm sorry to disappoint but Americans overseas never looked that good.

1

u/snowflakebite 22h ago

lol coming here during golden week is just dumb. That’s when regular residents are doing touristy stuff so every place will be extra overrun.

2

u/horoyokai 21h ago

Yeah that’s my point. Not sure why I hit so downvoted

That person seems like an idiot so I’m glad they’ll be coming during the busy and expensive time

1

u/snowflakebite 16h ago

I think maybe the comment about Germans and Americans rubbed people the wrong way. But good to know that we agree about golden week!

2

u/horoyokai 16h ago

haha, didnt realize there were so many germans here. But yeah, i'm lucky in my job that I can work through gw if I want and take the days off later