The Guardian view on Japan’s yen: Trump wants to keep the easy-money machine running | Editorial
A cheap currency helps finance the US tech boom. Washington is intervening because allies matter only when they are useful Japan’s yen has slid back towards 160 to the dollar, despite last month’s extraordinary US-Japanese intervention. Traders are betting that its role as a cheap funding pipeline for global finance will continue. Earlier this month the Trump administration stepped in to help…
The cheap yen is crucial for sustaining the US tech boom. Washington is intervening to keep this easy-money machine running. Despite a recent surge in the yen's value, traders expect it to stay low. Japan's currency has fallen to 160 per dollar since last month, following a US-Japanese intervention last month. The Trump administration helped Japan stabilize its currency shortly after taking office, explaining that Japan had been "very good to us… except for Pearl Harbor."
This intervention is not a rescue of the yen but an attempt to preserve a cash spigot that benefits the US. Japan's ultra-cheap money has become a global funding tool: banks borrow yen, sell it for dollars, and invest in higher-returning US assets, particularly tech shares. The rising American stock market supports collateral and investment. Japan's "carry trade" is a significant reason why Wall Street can leverage hundreds of billions into AI. Research suggests that AI consumes more than 1% of US GDP.
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Written by urgent.news from Guardian Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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