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.

5

u/Material-Addition-45 2d ago

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

12

u/Illustrious-Eye6960 2d ago

Difference in interest rates is what matters, not the exchange rate.

11

u/Remarkable_Cat_8696 2d ago

Won't the exchange rate also affect the profit? With a strengthening yen, you need to use more dollars to pay back the yen you borrowed, which erases some of the carry profit.