Bank of Japan’s Quiet Dollar Liquidity Move Sparks Market Speculation

The Bank of Japan’s discreet announcement on July 15, 2025, to supply U.S. dollar funds against pooled collateral has raised eyebrows among analysts. While ostensibly a routine liquidity measure, macro analyst EndGame Macro suggests it may signal deeper stress in the global dollar funding ecosystem. The MOVE coincides with mounting pressure on Japanese institutions engaged in USD carry trades, as rising Fed rates and a weakening yen disrupt longstanding arbitrage strategies.

Years of profitable carry trades—borrowing cheap yen to invest in higher-yielding U.S. assets—are now unraveling. The BOJ’s intervention appears less about addressing immediate crises and more about preemptive risk management. This development underscores a broader trend: growing dollar scarcity as private markets struggle to allocate USD efficiently. Central banks may increasingly step in to fill liquidity gaps, with potential Ripple effects across global markets.