{"id":4410,"date":"2026-04-13T04:09:56","date_gmt":"2026-04-13T04:09:56","guid":{"rendered":"https:\/\/www.europesays.com\/japan\/4410\/"},"modified":"2026-04-13T04:09:56","modified_gmt":"2026-04-13T04:09:56","slug":"japan-just-stepped-up-its-currency-warnings-the-dollar-could-feel-it","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/japan\/4410\/","title":{"rendered":"Japan Just Stepped up Its Currency Warnings. the Dollar Could Feel It."},"content":{"rendered":"

Japan is turning up the heat on currency markets again as the yen slides amid gyrations in oil markets<\/a> \u2014 and the spillover could reach the dollar.<\/p>\n

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The dollar \u2014 a haven currency \u2014 is about 1.3% higher against the yen this year, with gains accelerating after the US and Israel attacked Iran. The greenback is up 5.9% against the Japanese currency over the past 12 months.<\/p>\n

On Tuesday, Japanese Finance Minister Satsuki Katayama said that the government was ready to act “on all fronts” to address speculative volatility in the yen.<\/p>\n

The yen was trading around 159 to the dollar on Tuesday \u2014 near the 160-per-dollar threshold where Japanese authorities could step in to support the currency, as they did in 2024.<\/p>\n

Adding to the strain, rising oil prices are weighing on the yen.<\/p>\n

Japan sources about 90% of its oil from the Middle East,<\/a> meaning any prolonged conflict in the region could drive up import costs and stoke inflation at home.<\/p>\n

Last week, Bank of Japan Governor Kazuo Ueda signaled that an April rate hike remains possible, which would support the yen.<\/p>\n

That is now spilling over into currency markets as moves in the dollar-yen trade could ripple through global markets. That’s because continued yen weakness tends to support the dollar by reinforcing carry trade flows into US assets.<\/p>\n

In contrast, a sharp reversal could trigger an unwind of those trades, potentially pushing the dollar lower and amplifying volatility across global markets.<\/p>\n

The yen carry trade risks<\/p>\n

The yen has long been the funding currency for the so-called carry trade,<\/a> where investors borrow cheaply in Japan and invest in higher-yielding assets abroad, particularly in the US.<\/p>\n

That flow has been a quiet but important driver of global capital flows, and a key force behind yen weakness in recent years.<\/p>\n

That dynamic briefly unraveled in the summer of 2024,<\/a> when the yen surged against the dollar after the Bank of Japan’s interest rate hike, triggering a wave of volatility across global markets.<\/p>\n

The move was widely tied to a partial unwind of yen-funded carry trades, as a stronger yen forced investors to rapidly cut leveraged positions and sell risk assets.<\/p>\n

That dynamic may not be done yet, said James Stanley, a senior strategist at Forex.com. He described the earlier unwind as “an abbreviated move” in a Monday podcast.<\/p>\n

He said that “the big drive point behind the USD trends, it’s going to be dollar yen,” underscoring the pair’s outsized role in shaping broader currency moves.<\/p>\n","protected":false},"excerpt":{"rendered":"Japan is turning up the heat on currency markets again as the yen slides amid gyrations in oil…\n","protected":false},"author":2,"featured_media":4411,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[175],"tags":[4260,4259,217,215,4255,4257,4254,4263,4256,8,214,216,4258,4261,4262,25,222,1203,1691],"class_list":{"0":"post-4410","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-amplifying-volatility","9":"tag-bank","10":"tag-business","11":"tag-business-of-japan","12":"tag-carry-trade-flow","13":"tag-currency-market","14":"tag-dollar","15":"tag-dynamic-briefly","16":"tag-global-market","17":"tag-japan","18":"tag-japans-business","19":"tag-japanese-business","20":"tag-move","21":"tag-oil-market","22":"tag-tuesday","23":"tag-us","24":"tag-year","25":"tag-yen","26":"tag-yen-weakness"},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/posts\/4410","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/comments?post=4410"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/posts\/4410\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/media\/4411"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/media?parent=4410"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/categories?post=4410"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/tags?post=4410"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}