Japan's Yen Weakness Continues to Worry Policymakers

The Bank of Japan (BOJ) has executed a massive ¥11.7 trillion spending initiative in an attempt to strengthen the yen, but the results have been underwhelming.

Despite the staggering outlay, the yen has continued to drift towards the psychologically important 160-per-dollar level, raising concerns about the BOJ's ability to stabilize the currency.

The weakness of the yen is having a profound impact on global markets, particularly in the realm of cryptocurrencies. The carry trade, which involves borrowing cheaply in Japan and investing in higher-yielding assets, has been turbocharged by the yen's decline.

If the yen were to appreciate suddenly, it could lead to a rapid unwinding of these trades, with potentially disastrous consequences for crypto markets.