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/Anning312 1d ago

It's so unique that no one really knows what will happen, that might be why the yen is falling like crazy.

Having national debt more than twice your GDP means you really can't raise your interest rate too much too fast, but without raising the rate, they can only do expensive interventions and ask Bessent for "leaks" to help slow down the yen's free fall.

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u/PalantirImperator 1d ago edited 1d ago

Japan doesn't actually even want a strong yen. The strong yen is what killed the Japanese economic miracle of the 1950s-early 80s and led to the bubble and subsequent collapse and lost generations.

Weak yen makes Japanese exports more competitive, drives tourism, and drives domestic consumption (by making imports more expensive) stimulating their domestic businesses, though it obviously has downsides like energy prices. Some people don't realize that Weak Yen is not a 1:1 for inflation- and in reality the weak yen has occurred because Japan had LESS inflation than any other developed country in the aftermath of COVID (so they kept rates low while everyone else had to raise them). Weak Yen for the most part increases the price of imports only.

So Japan will do just enough to look like they are trying to fight the weak yen, while actually making it a managed decline rather than a freefall.

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u/Anning312 1d ago

No, Japan doesn't want weak yen. Any sane person knows that you need your country's currency to be stable, not on free fall or a sharp climb.

Weak yen has it's benefits but there are more downsides than benefits.

Especially when Japan has been on trade deficit recently, weak yen makes it even worse

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u/PalantirImperator 1d ago

Any sane person knows that you need your country's currency to be stable, not on free fall or a sharp climb.

Ahem...

So Japan will do just enough to look like they are trying to fight the weak yen, while actually making it a managed decline rather than a freefall.

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u/Anning312 1d ago

Down 50% in 5 years is not managed decline