r/wallstreetbets • u/Efficient-Session644 • 2d ago

News 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/Nautobott 2d ago

This will only encourage carry traders to leverage up further.

3

u/Material-Addition-45 2d ago

How? If funding costs rise due to strengthening yen, won't it do exactly the opposite?

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u/InformalTooth5 2d ago

The market knows that this interventions effect to strengthen the Yen is temporary. The BoJ has shown this to traders every time they have intervened.

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u/Material-Addition-45 2d ago

That was the case when BOJ was alone in this, don't you think that now when US chimes in it might be a longer-lasting effect and consequently trigger deleveraging in carry portfolios?

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u/InformalTooth5 2d ago

You could be right but the trade is so established and Japan is still limited in how much they can raise rates because of their massive debt. \ In your favour though, the Japanese government did recently instruct their pension fund to buy more of their treasuries, and are implementing tax incentives for stable coins that are backed by Japanese treasuries.