Japan’s chief currency official, Atsushi Mimura, has emphasized that the government is closely monitoring the markets for any resurgence in yen carry trades, which could lead to increased volatility, according to an interview with public broadcaster NHK on Friday.
Mimura noted that while the majority of previous yen carry trades—where investors borrow yen at low interest rates to invest in higher-yielding assets—have likely been unwound, authorities remain vigilant. “If such trades begin to rise again, it could lead to heightened market volatility,” Mimura said, adding that the government is consistently observing market trends to prevent such scenarios.
Mimura also highlighted that Japanese authorities are prepared to intervene if currency fluctuations become excessively volatile or deviate from economic fundamentals in a manner that negatively impacts businesses and households.
Having taken on the role of vice finance minister for international affairs in July, Mimura now oversees Japan’s currency policy, succeeding Masato Kanda.
Yen carry trades gained popularity based on expectations that the Bank of Japan (BOJ) would maintain its ultra-low interest rates. This strategy contributed to the yen’s significant depreciation, pushing it toward three-decade lows earlier this year. However, a sharp reversal followed the BOJ’s July 31 decision to raise short-term interest rates, prompting a rapid recovery in the yen.
