During the Asian trading session on Tuesday, Japanโs Finance Minister Shunichi Suzuki made remarks on the foreign exchange market, stressing that he would continue to maintain close communication with the U.S. Treasury to preserve market order, and reiterating that its policy stance would remain unchanged. Driven by rising expectations of tighter rates from the Bank of Japan and the continued inflow of funds into Japanese assets, the yen has strengthened sharply against the U.S. dollar, reaching a new high in six months and even breaking the key level that Japanโs authorities intervened to support the FX market at toward the end of July.
This move reflects the marketโs increasingly aggressive pricing of a shift in Japanโs monetary policy. On Wall Street and among mainstream institutions, there is now near-complete pricing for the likelihood that the Bank of Japan will raise rates by 25 basis points next week. Moreover, comments from economic advisers have suggested that the tightening cycle will not pause after September. Against the backdrop of major central banks in Europe and the United States generally preparing to begin a rate-cutting cycle, the Bank of Japanโs counter-trend tightening has significantly narrowed the U.S.-Japan interest-rate spread, completely overturning the long-standing global macro trade logic.
From a broader perspective across financial markets, the ongoing strengthening of the yen poses a direct threat to global liquidity. The global carry trade, which is based on low-interest-rate yen, is now facing a painful wave of deleveraging and position closures. As borrowing costs rise, cross-border funds are forced to sell overseas high-yield assets to cover yen exposure. This could lead to greater volatility in global bond yields and exert substantial downside pressure on risk assets trading at elevated valuations, such as U.S. equities.
For crypto markets, the unwinding of the carry trade is a classic signal of tighter liquidity. Risk assets, represented by
$BTC , have benefited deeply from the global tide of cheap liquidity in the past. Now, as the funding chain tightens, the crypto market inevitably faces the pain of deleveraging and liquidity withdrawal in the near term. Investors should be alert to the chain-reaction liquidity shock triggered by a stronger yen, and market sentiment is likely to remain under pressure in the short run.
#JPY #ๆฅๆฌๅคฎ่ก #liquidity