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Japan’s yen slides back near 160 per dollar amid US support bid
The yen’s move is framed as part of a US-driven effort to keep the yen carry trade funding pipeline operating for higher-return US assets.
Japan’s yen has slid back toward 160 per US dollar after last month’s US-Japanese intervention, with traders positioning for the currency’s role as a cheap funding conduit to continue. Guardian Economics argues that Washington is aiming to preserve a “cash spigot” that supports global finance rather than simply rescue the yen. The analysis says the yen has functioned as a global funding utility through the carry trade, where investors borrow yen, sell it for dollars, and buy higher-returning US assets, including tech shares. It adds that rising US stock markets can improve collateral conditions for these trades, helping Wall Street lever capital into areas such as AI. Guardian Economics links the strategy to the pace of AI investment, citing research suggesting AI can consume more than 1.0% of US GDP. The column also describes the latest US action as involving selling at least $10 billion in euros and buying yen to slow the currency’s decline, while warning that keeping the yen from collapsing matters to avoid disruptions such as potential US Treasury sales. It further notes that rising oil prices tied to US-Iran tensions can stoke Japan’s inflation and weigh on the yen, and it considers the market implications if the yen were to weaken again toward about 164 per dollar. The piece argues that aggressive Japanese rate increases are unlikely because they would likely choke off Japan’s investment efforts, while a sharper turn could still contribute to a chaotic unwind by narrowing the spread between investor returns and yen borrowing costs.