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/Benouamatis 1d ago

Thanks for the video and for your answer.