In the background of the sharply falling yen… “Triple Red, possibility of resumption of Encarry” :: Sympathetic Media Newsis ::

Expert: “This is due to the recent yen selling speculative forces.”

(Seoul = Newsis) Reporter Kim Ye-jin = Japan’s Nippon Keizai Shimbun (Nikkei) analyzed on the 14th that the background to the rapid weakening of the yen against the dollar is the ‘triple red’ of the United States (Republican control of the presidency and the Senate and House of Representatives). did it An expert said that there is a possibility of resuming the ‘en-carry trade’.

The newspaper cited the rise in U.S. 10-year Treasury yields as the main reason for the weakening yen. The reason is that as the triple red became clear, the view that there would be no brake on the financial deterioration was leading to a rise in the 10-year government bond interest rate.

In particular, when the Consumer Price Index (CPI) for October was announced on the 13th (local time), the dollar strengthened to 154 yen per dollar and the yen weakened in the New York foreign exchange market. This is because the prospect that interest rate cuts can continue has gained strength.

However, as long-term interest rates rose, the dollar began to weaken again. This is because the 10-year government bond interest rate fell immediately after the CPI was announced, but then rose sharply again.

The newspaper explained, “This indicates great concern that the U.S. government’s debt will expand further due to expectations of additional interest rate cuts and President-elect Trump’s economic policies.”

The time when yen selling is active is when the New York foreign exchange market in the United States is open. Accordingly, Mark Chandler Bannockburn, chief global foreign exchange market strategist, pointed out that the recent yen selling was “due to speculative forces.”

He also mentioned the rise in long-term interest rates and said, “There is a possibility that the yen carry trade has resumed.” Yen carry trade refers to borrowing yen cheaply and investing in foreign high-yield assets.

Observations that the Japanese government is unlikely to intervene in the exchange rate are also having an impact on the weakening yen.

Scott Bessent, founder of the hedge fund Key Square, is being mentioned as the most likely candidate for Treasury Secretary in the second Trump administration.

In an interview with the Financial Times (FT), he hinted at a strong dollar orientation, saying, “I believe that if good economic policies are adopted, the dollar will naturally become stronger.” President-elect Trump also showed an attitude of tolerating a strong dollar, saying, “I support the U.S. dollar as a reserve currency.”

An American currency trader gave a negative assessment of Japan’s intervention, saying to Nikkei, “It will be difficult to take actions that may antagonize the United States.”

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