The Japanese currency and US tech stocks share the same fatal problem: momentum can’t survive broken fundamentals
3-MIN READ3-MINAndy XieDr Andy Xie is a Shanghai-based independent economist specialising in China and Asia, and writes, speaks and consults on global economics and financial markets. Published: 4:30pm, 14 Aug 2026In a rare intervention, the US has propped up the Japanese yen. The move is seen as a bid to hold off a further rise in yields for US government bonds – amid Japan’s sell-off of US Treasuries to fund its shoring up of the yen – a rise that threatens the US artificial intelligence bubble.That the United States bought yen for the first time in decades – coordinating with Japan – had a bigger psychological impact on the market than Tokyo’s interventions alone. But give it three or four weeks and the yen-to-dollar rate is likely to snap back above 160.The yen has been fundamentally weakened by a double shock: the rise in Chinese electric vehicles has hit Japan’s car exports and the energy price spike following the Iran war has hit the wider economy. Technical interventions will not stop its slide.The car industry is Japan’s last economic stronghold but neither the government nor businesses are doing enough to pivot towards electric vehicles, and Chinese competition will only grow. Unless another export industry rises in replacement, the yen can only depreciate. Energy import costs are also rising rapidly in Japan, which depends on the Middle East for 90-95 per cent of its oil. The unexpectedly large trade deficit in June is an indicator of things to come.
