Japan Sell-off US Treasury and EU Debt: Is the US Economy on Brink of Collapse?

Japan Sell-off US Treasury and EU Debt: Is the US Economy on Brink of Collapse?

Today, the Japanese currency, yen, experienced a significant drop, continuing its downward trend due to several factors. The primary reason for the yen’s fall is the divergence in monetary policies between Japan and other developed economies, especially the United States. While the U.S. Federal Reserve has been raising interest rates to combat inflation, the Bank of Japan has maintained very low rates to stimulate its stagnant economy. This interest rate disparity has led to a weakened yen, prompting Japanese authorities to intervene in the currency market to stabilize the situation.
Japan is considering selling off some of its U.S. Treasury holdings as part of its strategy to stabilize the yen. Recently, Japan’s Norinchukin Bank announced plans to liquidate $63 billion in U.S. and European treasuries to address unrealized losses on its balance sheet. This move, while significant, represents a broader strategy by Japanese financial institutions to mitigate financial risks associated with the weakening yen and divergent monetary policies between Japan and the U.S..