Remember the yen-splosion in early August? Of course, you do. Just over a month later, the Japanese Yen is now stronger than it was back then.

Given the context— the Fed’s first rate cut scheduled for next week, weakening the USD, and the BoJ raising Japanese rates, strengthening the Yen— the steady rise in the Yen relative to the USD isn’t cause for alarm.

That said, the persistent rise in the Yen means any institution still engaged in the yen-carry trade is facing increasing pressure. While this doesn’t guarantee a second act of the yen-splosion, it’s worth noting that the mini-banking crisis with SVB, which began in March 2023, did have a second act about a month later with First Republic in May.