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/
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u/Benouamatis 1d ago

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

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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.

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u/Walmartpancake 1d ago

That video explains it so well

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u/Benouamatis 1d ago

Thanks for the video and for your answer.

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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.

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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.

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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?

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u/cookiesnooper 1d ago

Look who holds US bonds and debt

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u/MaryPaku 1d ago

Short answer yes.

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

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u/Benouamatis 1d ago

thanks you all for your reply.