🚨 JAPAN JUST RECORDED ITS HIGHEST NUMBER OF H1 BANKRUPTCIES SINCE 2022.
45 companies went bankrupt between January and June 2026 purely because of the weak yen. Up 30 percent from last year.
The yen is now at 162 per dollar. The weakest it has been since 1986.
But there's one more bigger problem.
Japan's small businesses bought a product called a reverse knockout option to protect themselves from yen weakness.
It works until the yen hits a preset level. The moment that level is breached, the protection vanishes completely. The company is left fully exposed with no hedge.
The next cluster of knockout levels sits between 162 and 170 yen per dollar.
The yen is already at 162.
Once companies lose protection, they are forced to buy dollars in the open market.
That pushes the yen down further. Which triggers more knockouts. Which forces more dollar buying.
There is no floor to this.
These are not Wall Street firms with risk management teams. These are small importers, food suppliers, and manufacturers who employ most of Japan's 67 million private sector workers.
They are being crushed by four things hitting at the exact same time:
- A 40-year low currency.
- Surging raw material costs from the Iran war.
- Rising borrowing costs.
- And the highest wage pressures Japan has seen in decades.
The Bank of Japan can raise rates to stop the yen from falling further.
But higher rates will bankrupt the same businesses the weak yen did not already kill.
So Japan is completely stuck now.