A cheap currency helps finance the US tech boom. Washington is intervening because allies matter only when they are useful

Japan’s yen has slid back towards 160 to the dollar, despite last month’s extraordinary US-Japanese intervention. Traders are betting that its role as a cheap funding pipeline for global finance will continue. Earlier this month the Trump administration stepped in to help Tokyo stabilise its currency. “Japan’s been very good to us, with the exception, of course, of Pearl Harbor,” Donald Trump explained. More help is likely to be on its way.

But this is less a rescue of the yen than an attempt by Scott Bessent, the US treasury secretary, to preserve a cash spigot that benefits the US. Japan’s ultra-cheap money has become a global funding utility: bankers borrow yen, sell them for dollars and buy higher-returning US assets, notably tech shares. Rising American stock markets support collateral and investment. Japan’s “carry trade” is one of the reasons Wall Street can lever hundreds of billions into AI. Research suggests AI sucks up more than 1% of US GDP.

Do you have an opinion on the issues raised in this article? If you would like to submit a response of up to 300 words by email to be considered for publication in our letters section, please click here.

It’s a great betrayal: poor communities neglected while multimillionaires peddle a global Maga agenda. How is that America first?

“THE CORRUPTION IS AT LEVELS RARELY SEEN BEFORE,” Donald Trump posted on Truth Social in February 2025. He was not referring to his own administration, but to the US Agency for International Development (USAID). “CLOSE IT DOWN!” the president added.

Just a few hours later USAID was in effect closed down, with most of the staff placed on indefinite administration leave. This was framed as part of Trump’s “America first” agenda. USAID, the Trump administration and his sycophants in the rightwing media had argued, was wasting taxpayers’ hard-earned money on ridiculous projects abroad instead of improving life at home. In the lead-up to the shuttering of USAID, for example, one of the most shameless lies about the agency, repeated without any evidence by the likes of Fox News, was that it was spending millions on condoms for Gaza.

Arwa Mahdawi is a Guardian columnist