The Briefing · Rates & FX desk
Japan's yen defence and the broken yield-FX link
Rising JGB yields no longer pull the yen higher, and Tokyo's Treasury sales are testing the dollar's price of capital.
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By The Ledger Desk
AI synthesis · 1d ago · 4 sources
The textbook channel from monetary policy to currency — higher domestic yields, stronger currency — has stopped working in Japan. Rates have climbed; the yen has not. That alone would be a curiosity. The complication is that the Ministry of Finance is funding yen defence by selling US Treasuries, exporting Japan's domestic problem into the world's reserve asset.
