Japan’s rising bond yields and low interest rates sustain pressure on the yen despite recent currency interventions by authorities.
USD/JPY trades at 159.30, up 0.15% on Tuesday, as Japan’s fiscal challenges and interest rate differentials with the U.S. cap yen strength. Investors remain cautious over the country’s mounting public debt and expansionary fiscal policy pressures, which offset risk aversion benefits for the currency.
Japan’s long-term bond yields continue to rise, exacerbating its debt burden, while the Bank of Japan’s ultra-low rates lag behind other major central banks. This policy gap fuels yen-funded carry trades, limiting appreciation potential. Geopolitical tensions in the Middle East further strain Japan’s energy import costs, threatening economic stability.
Recent coordinated forex interventions by U.S. and Japanese authorities have had limited impact, though further action remains possible.