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US Treasury undertakes historic intervention in yen market

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Re: US Treasury undertakes historic intervention in yen market

#101

Post by hn_throwaway_99 »

koito17 wrote: post #71
rayiner wrote: post #65

Earlier quoted context omitted.

The devaluation of the Yen against the dollar (from the typical 110:1 to these days 150:1) started around 2021 and has been a source of angst in Japan for quite some time. People were complaining about it constantly when I was last in Tokyo in December 2025, when oil was at $70/barrel.

The devaluation didn't really get out of control until 2022 IME. In 2021 you were still able to divide by 100 and not be far off in conversion. Typically traded between 105 ~ 115. Nowadays the Yen is so weak that I unconditionally convert my whole paycheck to USD after paying rent. Even if risk-free interest rates between Japan and United States converge, there's just not much reason to hold Yen if you want to avoid…

As someone who hasn't followed this closely, when/why did things switch? Japan had the opposite deflation problem for years (decades?) and IIRC tried battling that with "money printer go brrrr" for a long time. How did inflation become their primary problem?

Re: US Treasury undertakes historic intervention in yen market

#102

Post by lazide »

btown wrote: post #93
lazide wrote: post #86

Earlier quoted context omitted.

Anyone who thought the admin was anything but conmen deserves what they get. The sad part is everyone else they’re going to take with them.

> deserves what they get American voters exist in an environment of propaganda addiction, with every piece of their personal technology reinforcing and profiting from said addiction, that has never existed before. I have great empathy and understanding for those who are bombarded by voices that are actively manipulating them for engagement, and I believe this empathy is key to understanding if, and how, a landscape o…

The issue here is that mindset is exactly what enables their continued behavior.

How many ‘DUI’s are acceptable? How many innocents dying will be ignored?

Enabling an addict makes you (in my opinion) just as culpable in the outcomes as they are.

Re: US Treasury undertakes historic intervention in yen market

#103

Post by refulgentis »

hn_throwaway_99 wrote: post #101
koito17 wrote: post #71

Earlier quoted context omitted.

The devaluation didn't really get out of control until 2022 IME. In 2021 you were still able to divide by 100 and not be far off in conversion. Typically traded between 105 ~ 115. Nowadays the Yen is so weak that I unconditionally convert my whole paycheck to USD after paying rent. Even if risk-free interest rates between Japan and United States converge, there's just not much reason to hold Yen if you want to avoid…

As someone who hasn't followed this closely, when/why did things switch? Japan had the opposite deflation problem for years (decades?) and IIRC tried battling that with "money printer go brrrr" for a long time. How did inflation become their primary problem?

- External sources of inflation: COVID global inflation raises price of imports, same with Russia v. Ukraine global inflation.

- Post a few up is way too aggressive about completely dismissing Iran conflict inflation/gas. It matters, big time, and specifically for Japan, it's a 3rd thing to add to above external sources of inflation.

- They held interest rates while ex. US hiked them, also making currency less valuable. (intentionally, and a good idea)

FWIW this isn't necessarily a bad thing, for Japan. It broke the dam of stagnation.

It is more unusual that the US did this than that Japan's currency depreciated.

My $0.02: the backstory starts with the bonds boys not liking the new fed chair. Long term USD interest rates spiked big time this week, after his press conference, not after the announcing they weren't hiking rates.

If they allow another spike due to dread of Japan dumping Treasuries, you might suddenly have a crisis

(your source: 38 yo, BA in economics @ 22, who kept up with economics nerdery along the years)

Re: US Treasury undertakes historic intervention in yen market

#104

Post by epolanski »

jordanb wrote: post #70
eigenspace wrote: post #5

Japan holds a huge amount of US treasuries, and I guess was considering a mass sell off to raise cash to defend the Yen. US treasury bond yields are already dangerously high for the US and Japan selling treasuries would push yields up even higher, and could trigger more panic selling from others. I guess this is Bessent's scheme to try and kick that can down the road.

This would be a dumb move. If Japan's treasury started selling a large amount of US debt, the Fed could buy it up and pay interest to itself. Japan would then have a whole bunch of non-interest-bearing US dollars and the Fed would have a lot of interest-bearing US bonds. Now it's true that Japan's treasury could then use those dollars to buy something else like stock in US companies but they could have done that all…

> the Fed could buy it up and pay interest to itself.

With what money..?

Re: US Treasury undertakes historic intervention in yen market

#105

Post by lazide »

timr wrote: post #53
xbmcuser wrote: post #45

Earlier quoted context omitted.

It is not completely but part of the reason Japan wants to defend it's currency is inflation because of increase in energy prices.

In the sense that weak currency makes everything you buy from foreign partners more expensive, sure. The place where you go wrong is drawing a straight line to the US actions in Iran. They’re not directly connected.

Oil is a major thing that requires foreign currency to buy, as Japan has no meaningful oil reserves

Re: US Treasury undertakes historic intervention in yen market

#106

Post by [deleted] »

SpicyLemonZest wrote: post #99
btown wrote: post #93

Earlier quoted context omitted.

> deserves what they get American voters exist in an environment of propaganda addiction, with every piece of their personal technology reinforcing and profiting from said addiction, that has never existed before. I have great empathy and understanding for those who are bombarded by voices that are actively manipulating them for engagement, and I believe this empathy is key to understanding if, and how, a landscape o…

Understanding, absolutely. None of us are immune from propaganda, and most of us have at one time or another been swayed by selective arguments and echo chambers to behave poorly. I don’t like that you have empathy for people who are right this second steering the government in a project of performative cruelty against me. I think you should withhold your empathy until they’ve been stopped and appropriately punished…

[deleted]

Re: US Treasury undertakes historic intervention in yen market

#107

Post by Yokolos »

sph wrote: post #18
eigenspace wrote: post #15

Earlier quoted context omitted.

Not really what you asked for, but what I would say is that this specific incident isn't like some huge deal or something. It's just the USA doing something that helps Japan stabilize its currency, and helps the USA avoid a spike in people selling US treasuries (which would raise US borrowing costs). It's unusual, but not earth shattering or crazy. ____________________ The wider picture looks rather worrysome though.…

Don’t forget the EUR side to the operation. US is helping Japan by selling Euros. The big question whether this is a sensible bet.

US sells EUR, buys JPY, BoJ doesn't need to sell US treasuries. There's no bet here. What do you mean by bet? They could be losing money on the trade and it wouldn't matter as long as they avoid US treasury yields from rising any further.

Re: US Treasury undertakes historic intervention in yen market

#108

Post by jordanb »

epolanski wrote: post #104
jordanb wrote: post #70

Earlier quoted context omitted.

This would be a dumb move. If Japan's treasury started selling a large amount of US debt, the Fed could buy it up and pay interest to itself. Japan would then have a whole bunch of non-interest-bearing US dollars and the Fed would have a lot of interest-bearing US bonds. Now it's true that Japan's treasury could then use those dollars to buy something else like stock in US companies but they could have done that all…

> the Fed could buy it up and pay interest to itself. With what money..?

You're asking where the Fed gets money?

Re: US Treasury undertakes historic intervention in yen market

#109

Post by CraigJPerry »

Eddy_Viscosity2 wrote: post #98
bsaul wrote: post #83

Earlier quoted context omitted.

"was considering a mass sell off to raise cash to defend the Yen." How would that have worked ? Selling US bonds in exchange for yens, to diminish the amount of yen in the economy, and pump up its price ?

Currency interventions never work. They buy a bit of time maybe, but without any fixes to the underlying causes that made the intervention necessary, its a temporary solution.

>> Currency interventions never work

Where did you learn that? It doesn't reflect the structural volumes present. Central banks make interventions all the time in line with little stabilisation programs. Those are almost always deemed success.

Maybe you deduced it by yourself? If so, fx is weird despite traditionally being seen as the simplest area in finance. E.g. It's counter-intuitive but we tend to think trade make up most FX volume globally. It's in the area of less than 3%. The majority by far is speculative and hedging.

The other trap is fx volume, people assume the know what volume is but then they learn expressions of fx volume is almost always actually tick volume.

Re: US Treasury undertakes historic intervention in yen market

#110

Post by tanseydavid »

blitzar wrote: post #22
eigenspace wrote: post #5

Japan holds a huge amount of US treasuries, and I guess was considering a mass sell off to raise cash to defend the Yen. US treasury bond yields are already dangerously high for the US and Japan selling treasuries would push yields up even higher, and could trigger more panic selling from others. I guess this is Bessent's scheme to try and kick that can down the road.

> kick that can down the road With two left feet and a couple of swings and misses, the can isnt in much danger.

> With two left feet

...and about two feet left before the can hits the wall.

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