Yen Near 40-Year Low as BoJ Rate Decision Looms
Get the Finance newsletter
Daily finance — markets, central banks, M&A, the prints that move money. Free.
- USD/JPY approached 164 on Tuesday, just a fraction below new 40-year highs hit the previous week, per TradingView data cited in the article.
- Bank of Japan is set to decide on interest rates July 31, with its benchmark already at 1.0% — its highest since September 1995.
- Markets price a 98% probability of a rate hold, with Polymarket putting the odds of no change at 99% as of Tuesday, though the BoJ's June meeting summary flagged further hikes ahead citing CPI approaching 2%.
- The yen carry trade unwound sharply in August 2024 after BoJ interventions, causing immediate drops in Bitcoin and altcoins, and analysts warn a repeat is possible as USD/JPY builds on new highs.
- Analyst Ricky Ho wrote that carry-trade unwinds are "rarely gradual" thanks to high leverage, adding that the more important issue than the next hike's timing is that "the direction of policy has fundamentally changed."
- The yen has stayed above the key 160 level against the dollar even after the June rate hike, a concurrent headwind the BoJ itself has flagged could feed back into CPI through consumer purchasing power.
Why it matters: The yen remained above 160 against the dollar even after the BoJ's June hike, meaning the carry trade that financed risk assets has not unwound yet — it has merely rebuilt. With USD/JPY at fresh 40-year highs and leverage still in place, even a dovish July 31 hold could spook yen-funded positions if paired with hawkish forward guidance, repeating the August 2024 shock to Bitcoin and altcoins.
