Comment by timr
9 hours ago
No. That has nothing to do with this.
Setting aside the obvious fact that the BOJ does not buy oil, they’ve been engaged in a (futile) currency defense scheme since long before the Iran conflict. This is purely about the interest rate spread.
It is not completely but part of the reason Japan wants to defend it's currency is inflation because of increase in energy prices.
In the sense that weak currency makes everything you buy from foreign partners more expensive, sure.
The place where you go wrong is drawing a straight line to the US actions in Iran. They’re not directly connected.
Oil is a major thing that requires foreign currency to buy, as Japan has no meaningful oil reserves
The devaluation of the Yen against the dollar (from the typical 110:1 to these days 150:1) started around 2021 and has been a source of angst in Japan for quite some time. People were complaining about it constantly when I was last in Tokyo in December 2025, when oil was at $70/barrel.
The devaluation didn't really get out of control until 2022 IME.
In 2021 you were still able to divide by 100 and not be far off in conversion. Typically traded between 105 ~ 115.
Nowadays the Yen is so weak that I unconditionally convert my whole paycheck to USD after paying rent. Even if risk-free interest rates between Japan and United States converge, there's just not much reason to hold Yen if you want to avoid losing purchasing power to inflation.
e.g. I can risk money in NTT stock for a meager 3.0% dividend yield. Or I can convert to USD and keep the cash in my brokerage account, where it earns 3.4% interest. If I want to raise the risk to similar levels as the NTT stock, I would be looking at utility company ETFs yielding up to 7% for the past few years. Of course, there is foreign exchange risk (e.g. 10% move down in USD/JPY and a year's worth of carry trade gains are eliminated). But if the fundamentals were there for a stronger Yen, then intervention wouldn't be necessary. So for now I'm exposing myself to FX risk for the chance at getting marginally better wealth preservation.
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Investor fears about rising oil prices and how Japan’s Prime Minister Sanae Takaichi can afford her fiscal stimulus plans recently pushed the yen towards 40-year lows
From TFA.
That line is worth exactly as much as the daily financial news quote “explaining” why the stock market wiggled in a particular direction yesterday.
All of those things have some impact on “investors” thinking at all times. They do not uniquely explain the current events. Japan has been defending the yen like this since at least 2022.
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> Setting aside the obvious fact that the BOJ does not buy oil
I guess you are not aware that it is the Japanese corporations and not the BOJ that hold the US bonds
The BOJ had about $1.1 trillion in US Treasuries as of the beginning of the year.
> https://ticdata.treasury.gov/resource-center/data-chart-cent...
Look at the very first row, Japan is the single largest holder of US Treasuries. Why did you post this false claim? Please do better.