Japan may push for yen-denominated oil pricing, arbitrage trading faces impact

Bitget

News

智通财经2026/09/27 02:11

Show original

Bitget offers one-stop trading for cryptocurrencies, stocks, and gold. Trade now!

A welcome pack worth 6200 USDT for new users! Sign up now!

There are reports that sources related to the Bank of Japan have revealed an important undisclosed agreement to secure Japan's oil demand, which the market has interpreted as a potential move for crude oil to be priced in yen.
If this comes true, the yen carry trade that has persisted for decades will not just be shaken, but broken.
Crude oil priced in yen means that Japan or its trading partners would settle at least part of their oil purchases in yen rather than US dollars, whereas oil has been traded in dollars for decades.
Japan earns income in yen and usually needs to sell yen in exchange for dollars to pay for oil. This ongoing yen selling is one of the structural pressures that suppress the yen and make cheap yen financing attractive.
If a growing proportion of Japan's oil bill is paid in yen—especially after the Strait of Hormuz interruption and under a bilateral political agreement with the United States—it will change two things: Japan’s energy-related demand for US dollars will decrease, and counterparties accepting yen will have reason to hold or recycle yen, thereby reducing a major source of yen selling.
Meanwhile, Japanese yields are rising, the yen remains weak despite multiple interventions, and the US 10-year Treasury yield has surpassed 5.18% and shows no sign of stopping.
Some opinions suggest that US Treasury Secretary Bessent even sold euros to save the yen, doubled the scale of US Treasury repurchases, and warned the Federal Reserve to expand access to the FIMA facility for Japan, or else risk witnessing a US Treasury collapse.
Moving towards yen-priced crude oil will strengthen the yen, raise the funding costs for the old carry trade, and accelerate the transition towards reverse carry trades.
The rise in yields in both countries has already tightened financial conditions. If a sudden squeeze on the yen is added, it will force leveraged positions to close out as both US and Japanese bond yields rise simultaneously.
From a market perspective, if yen-priced crude oil becomes a reality, it will change energy settlement and arbitrage capital flows. It will be important to monitor the details of the relevant agreements, movements in the yen exchange rate, and the linkage between US and Japanese bond yields going forward.

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

Understand the market, then trade.

Bitget offers one-stop trading for cryptocurrencies, stocks, and gold.

Trade now！

Japan may push for yen-denominated oil pricing, arbitrage trading faces impact

You may also like

Crypto prices