Rate hikes to a 31-year high—but the yen is falling instead, down to a level that may need to be "rescued"
Last Friday, the Bank of Japan raised its policy rate to 1.25%, the highest level in 31 years. In the old script, the yen should get a breather.
Instead, over the past few days it has been hovering above 157— not only has it not risen, concerns about intervention have resurfaced.
I think there’s a crucial mismatch here: the market has already priced in this rate hike, and what’s really weighing on the yen is the thick wall of interest-rate differentials between the US and Japan. As long as carry trades remain profitable, the yen lacks an engine that can self-correct.
For anyone trading risk assets, this isn’t just an FX issue—once the yen is forced to a point where the central bank truly has to act, the kind of "sudden liquidity withdrawal" stampede often spills over into the entire market.
Question for you: with this round of the yen saying “hike and still not up,” do you think it’s only temporarily blunted—or that carry trades really are reaching the moment they need to wrap up?🤔
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#日本央行加息至31年高位
Last Friday, the Bank of Japan raised its policy rate to 1.25%, the highest level in 31 years. In the old script, the yen should get a breather.
Instead, over the past few days it has been hovering above 157— not only has it not risen, concerns about intervention have resurfaced.
I think there’s a crucial mismatch here: the market has already priced in this rate hike, and what’s really weighing on the yen is the thick wall of interest-rate differentials between the US and Japan. As long as carry trades remain profitable, the yen lacks an engine that can self-correct.
For anyone trading risk assets, this isn’t just an FX issue—once the yen is forced to a point where the central bank truly has to act, the kind of "sudden liquidity withdrawal" stampede often spills over into the entire market.
Question for you: with this round of the yen saying “hike and still not up,” do you think it’s only temporarily blunted—or that carry trades really are reaching the moment they need to wrap up?🤔
👉 关注我，点击进入聊天室，学习更多策略
#日本央行加息至31年高位