Bybit, the world’s second-largest cryptocurrency exchange by trading volume, has released a new FX Insight report analyzing the evolving landscape of the Japanese yen (JPY) carry trade, highlighting significant changes that could redefine this fundamental trading strategy in 2025.
The JPY has maintained its dominance as a funding currency in forex markets, but this may be the year when things start to shift.
The report, titled “What to Look for in the Yen Carry Trade for 2025,” identifies several key developments that traders and investors should monitor:
- The traditional role of the Japanese yen as the primary funding currency is facing new challenges due to potential changes in the Bank of Japan’s (BoJ) policies and evolving domestic economic conditions.
- Increased risk of rapid deleveraging events due to a possible yen appreciation, driven by BoJ monetary tightening or global risk-off scenarios.
- The emergence of alternative funding currencies, including the Swiss franc, euro, and US dollar, reflecting the need for strategic diversification.
- The critical importance of adaptive risk management strategies in response to changing market dynamics.
The analysis draws on comprehensive data from multiple authoritative sources, including the Bank of Japan, Federal Reserve, IMF, and Bloomberg Economics, offering actionable insights for navigating this complex environment.
“Japan’s economic landscape is shifting: inflation has finally surpassed the BoJ’s 2% target, wage growth is gaining momentum after years of stagnation, and there is speculation about potential adjustments to the BoJ’s monetary policy,” the report states. “This raises questions about the future of the yen as a funding currency and whether we are on the verge of a resurgence in traditional carry trades or a structural shift that will redefine global forex strategies.”
“In the emerging new era, forex market participants will need to adopt more dynamic strategies, emphasizing robust risk management and diversified approaches.”
The full report includes a detailed historical context, current market analysis, and 2025 outlook on high-yield alternative currencies such as the Mexican peso, South African rand, and Turkish lira.
