Operation Save the Yen: Japan partially turns off the cheap money tap, with a little help from its ‘American friend’
The Bank of Japan has aligned itself with the Federal Reserve, raising interest rates to curb the currency’s depreciation and get inflation under control
Japan has partially reduced its support for the yen by raising interest rates, according to wire material. This move comes as the U.S. Federal Reserve has also increased rates, widening the gap between the two economies. This strategy aims to strengthen the yen, which is crucial for the United States as a weak yen could force Japan to sell U.S. Treasuries, potentially leading to a massive sell-off.
Furthermore, Japan has promised to invest $550 billion in the U.S. by 2029, but a weak yen could jeopardize this commitment. By raising interest rates, the Bank of Japan makes returns on Japanese assets more attractive, thus strengthening the currency and making U.S. dollar investment more feasible.
Written by urgent.news from El Pais English's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
