Global finance looks like a 'giant Jenga tower' propped up by a Japanese yen that's in deep trouble

Live updates

1. 29d ago

   Yen Slide Persists Despite US-Japan Intervention

   The Japanese yen remains in decline despite a joint intervention by the United States and Japan. Carry traders are currently using the intervention to rebuild short positions, while Japan struggles to halt the currency's slide. Market volatility is impacting U.S. markets, and some analysts describe global finance as a "giant Jenga tower" supported by the troubled yen. The currency recently saw a slight increase as traders adjusted expectations regarding Federal Reserve rate hikes.

   Why it matters

   Japan's battle against yen bears has entered a new phase, with some questioning if a new Plaza Accord is necessary. The situation is critical because yen instability creates systemic risk for global financial markets. Japan faces a difficult trade-off when buying yen to stabilize the currency.

   What is confirmed

   • The United States and Japan conducted a joint intervention to stop the yen's decline.
   • The joint US-Japan intervention failed to halt the slide of the yen.

   Still unconfirmed

   • USD/JPY moving above 160 would cause credibility to fall further.

   What to watch next

   • Further Japanese government interventions in the currency market.
   Sources used for this update (12)

   1. CNBC — Why the historic U.S.-Japan intervention has failed to halt the yen’s slide
   2. Bloomberg — Carry Traders Exploit Intervention to Rebuild Yen Shorts
   3. The New York Times — Why Japan Is Struggling to Stop the Yen’s Decline
   4. The Economist — When Japan buys yen, it unwinds a dangerous trade
   5. ft.com — Traders are spoiling for a fight over the yen
   6. WSJ — Japanese Drama Is No Sideshow for U.S. Markets
   7. Fortune — Global finance looks like a 'giant Jenga tower' propped up by a Japanese yen that's in deep trouble
   8. Investing.com — What happens if USD/JPY goes above 160? ‘Credibility falls further’
   9. Real Investment Advice — Yen Intervention Narrative: What’s True And Not
   10. Goldman Sachs — What the US-Japan Currency Intervention Means for the Yen, Rates, and the Dollar
   11. Reuters — Yen edges up as traders push back Fed rate hike bets
   12. Nikkei Asia — 'A new Plaza Accord?' Japan's battle against yen bears enters new phase
   confidence 90%