Japanese Yen Hits 40-Year Low at 163 Against Dollar Amid Carry Trade Risks

According to Global Markets Investor, the Japanese yen fell below 163 against the US dollar, reaching its weakest level in 40 years on July 28. The move pushed USD/JPY to levels last seen in 1986. Hedge funds have increased bearish bets against the yen to 114,030 contracts worth approximately $8.7 billion, the largest positions since 2008, according to CFTC data.

The yen's depreciation matters for crypto markets because of its role in the global carry trade. Investors have long borrowed yen at low rates to fund higher-yielding assets, including Bitcoin and other cryptocurrencies. The Bank of Japan's July 31 rate decision could become a key catalyst; a policy shift or sharp yen appreciation could trigger unwinding of these positions, forcing asset sales and deleveraging across global markets.