Yen's Decline Continues as Global Investors Fuel Carry Trade

The Japanese yen has continued to weaken as investors take advantage of cheap borrowing opportunities in Japan.

The practice, known as the carry trade, involves borrowing money in a country with low interest rates and using those funds to buy assets that offer higher returns abroad. In this case, investors are borrowing yen at low interest rates and converting it into dollars or other currencies to invest in higher-yielding government bonds or other financial assets.

The wide gap between Japanese and overseas interest rates has remained a major driver of the trade, with Japan's Bank of Japan keeping interest rates near zero for years to support economic growth. Even after raising rates from ultra-low levels, borrowing in yen remains cheaper than in many other major economies.