Yen’s Debt in the Global Economy: An Analysis

Recently, the Japanese yen has seen a depreciation against the US dollar, reaching close to 160 per dollar. This occurs despite extraordinary interventions by the Trump administration and Japan's central bank aimed at stabilizing the currency. The underlying reason for this situation is the critical role played by the yen as a global financing tool, particularly in the American technology sector. By allowing international banks to lend in yen and sell these funds in the US market, Japan’s low interest rates serve as a catalyst for global financial expansion, especially in the tech industry. This strategy contributes to maintaining high stock markets in the United States and positively influences the revenue generated by high-tech companies, such as artificial intelligence firms. However, this dynamic also reflects a delicate balance between America's economic interests and Japan's monetary policy, which sees its financial interventions as a way to support its global ally. Source: The Guardian Business