Yen Crisis Spreads Global Convolutions as Trump Intervenes

The Japanese yen is experiencing a crisis, plummeting to a 40-year low against the US dollar. The country's massive public debt, at 204% of GDP, has sparked an intense rescue effort from Japan and the US. The US Treasury Secretary, Scott Bessent, pressured the Federal Reserve to help shore up the currency, warning that a fire sale of US treasury bills could damage the dollar and make it more expensive for the US to roll over its debt.

Japan's ageing population and stagnant tax base have made it difficult to fund massive stimulus packages. As a result, investors have taken advantage of low interest rates to borrow yen cheaply and buy expensive US assets, known as the 'carry trade.'

The US has spent $100 billion supporting the yen, but so far, it's had little effect. A collapse of the yen would trigger a massive global convulsion, crippling markets for South African commodities and causing capital to flee emerging markets.