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Japan yen intervention revives bitcoin carry trade fears despite weak link
CoinDesk • • business
Key Points:
- The U.S. Treasury Secretary Scott Bessent confirmed that the U.S. joined Japan in coordinated foreign exchange intervention to counter "disorderly yen movements," following the USD/JPY pair reaching a near 38-year low.
- Bessent emphasized the U.S. commitment to further joint interventions and expressed strong support for Japan's market and monetary actions to address the yen's substantial undervaluation.
- In August 2024, the Bank of Japan's unexpected interest rate hike to 0.25% triggered a yen strengthening and a sharp 20% drop in Bitcoin, driven by unwinding of yen carry trades and leveraged investors selling risk assets.
- Despite expectations of Bitcoin falling with a stronger yen, analysis shows Bitcoin's price movements correlated with broad U.S. dollar strength rather than yen fluctuations, challenging traditional carry-trade assumptions.
- The BOJ maintained its 1% interest rate last week, with Governor Kazuo Ueda citing AI demand and yen weakness as key factors driving inflation above 2%.
