The Guardian View on Japan’s Hidden Century: Cheap Money, Global Risk | Editorial

The Bank of Japan’s ultra‑loose policy has turned the yen into the world’s cheapest funding currency, fueling a massive carry‑trade that amassed roughly $435 billion between 2022 and 2024. A modest rate hike in March 2024 barely dented the trade, but the market remains wary of a sudden, aggressive tightening that could shrink spreads and force borrowers to repay yen‑denominated debt with more dollars. Such a shock would reverberate through global equity markets and leveraged hedge‑fund positions. Meanwhile, Japan’s internal challenges—stagnant wages and limited productive growth—mean its "century" is financial rather than economic.

Source: The Guardian — Opinion (Comment is free)