Japan's historic yen intervention has ‘turbo-charged’ the carry trade

Japanese 10,000-yen banknotes arranged in Kyoto, Japan, on Tuesday, Jan. 27, 2026. Kentaro Takahashi | Bloomberg | Getty ImagesJapan's historic effort to prop up the yen may have had an unintended consequence: giving some investors a better opportunity to double down on carry trade.Japanese investors net bought more than 5 trillion yen of foreign equities and long-term bonds over the two weeks ended Aug. 15, compared with net selling of over 300 billion yen in the prior two weeks, according to Ministry of Finance data.The purchases suggest investors took advantage of the yen's sharp rally following last month's joint U.S.-Japan currency intervention to snap up overseas assets at more favorable exchange rates, said market watchers."Intervention has 'turbo charged' the carry trade for fundamental & long term investors," according Jesper Koll, expert director at Monex Group. "As long as the cost of money in Japan is lower than the return overseas, carry trades will re-assert," Koll said. Stock Chart IconStock chart iconYen performance year-to-dateWhile authorities succeeded in jolting the yen higher, they did little to change the incentive for investors to borrow or raise funds ch...