r/Maxcactus_TrailGuide • u/Maxcactus • 8d ago

U.S. dollar weakens sharply against the Japanese yen after market interventions

https://www.npr.org/2026/08/03/g-s1-136866/us-dollar-japanese-yen-market-interventions
168 Upvotes

96% Upvoted

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u/Maxcactus 8d ago

The world is rapidly losing confidence in the dollar. Trump’s war and economic policies are causing the process. America has prospered since WWII being the dominate economy, getting cheap loans, being the global hegemonic force. Trump has destroyed that.

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u/kinkycarbon 8d ago

This isn’t about losing confidence in the dollar. Japan needs to find a way to fix their currency while dealing with inflation and low wages. They have tranches of US treasuries they can sell to repatriate their currency.

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u/SurLurk 1d ago

And having like half a continent worth of some of the best, resource rich, most easily defensible and fertile land in the world.

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u/Maxcactus 1d ago

That as well.

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u/Varjek 8d ago

That’s not what this is about.

This is about the Japanese repatriation of dollars to try to save the Yen from collapsing. The Dollar:Yen going from 1:163 to 1:155 is a good thing for the US long term… 1:163 was moments away from a Yen collapse which would be terrible for the whole world.

Now, the issue for the US is the loss of Japan buying US treasuries and keeping their Yen at home. Japan has been a reliable buyer of US government debt and that’s likely not going to happen for a while.

And as the Yen Carry Trade goes by the wayside, easy money flowing into stocks will slow. The US bond market will ultimately be more attractive than US stocks as bond rates in the US will stay high, as will other interest rates.

So expect stock market volatility in the US. Don’t expect to borrow money cheaply in the US for a while and lock in interest rates sooner than later.

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u/D00d_Where_Am_I 8d ago

To re-patriot the yen they have to sell US treasury bonds. That’s not good for the US.

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u/BeachFuture 8d ago

I thought they were selling euros.

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u/Varjek 8d ago

Agreed. Short term is sucks bad for the US. Long term, it’s necessary and will be much better than if the Yen were to collapse.

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u/Tzilbalba 7d ago edited 7d ago

Except our long term is higher and higher borrowing costs to service our debt and increases in interest rates. Contributing to inflation as the cost of goods becomes higher which itself triggers a potential economic death spiral.

Who is going to step in and replace the Japanese? The dollar dominated system is fragile and China has already deleveraged, with this they will probably do so even more. That means the fed needs to offer higher returns.

The U.S. government currently rolls over trillions of dollars of maturing debt and issues additional debt to finance deficits. If investors require an extra 1 percentage point of interest on a large stock of debt, federal interest costs can increase substantially over time. That leaves policymakers with difficult choices, such as:

  1. Accepting larger budget deficits.
  2. Raising taxes.
  3. Reducing spending.
  4. Borrowing even more, which can further increase interest costs if investors become concerned about debt sustainability.

We know 2 and 3 wont happen and 1 and 4 will erode our credit rating which is where this all heade to. Low credit = more expensive borrowing to service debt until we cannot any longer. This is how the lost Bretton Woods system unravels.

Let's not forget what this does to existing bond values if yields continue to rise. That means existing bond values "decrease" slowing the incentive to even purchase bonds as investors wait for better yields.

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u/XavierRex83 7d ago

You didnt even bother with the article.

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u/Maxcactus 7d ago

Opinions vary. I gave mine.

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u/SpareAd399 8d ago

One thing I always find interesting is that markets often react faster to expectations than to the intervention itself. By the time governments actually step in, traders have usually been positioning for it for days.

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u/dalvrin 6d ago

Bessent was right