Interest Rate Map: How the Difference Between the USA and Japan Supports the Dollar

Starting from February 2026, the interest rate map clearly illustrates the divergence between the monetary policies of the United States and Japan. This differentiation has created a new dynamic in financial markets, where investors closely monitor every move by central banks. According to reports from XS.com and data from Jin10, this gap is a key factor supporting the dollar’s strength on the international stage.

Significant Difference in Loan Interest Rates

The Federal Reserve maintains interest rates between 3.50% and 3.75%, remaining relatively high compared to other major economies. Meanwhile, the Bank of Japan, which recently withdrew from zero interest rate policy, set its rate at just 0.75%. This disparity—about 2.75 to 3.00 percentage points—creates an unprecedented yield structure for international financial operations.

Arbitrage Strategies in the Market Spotlight

The interest rate difference enables investors to implement profitable arbitrage strategies. Market participants borrow low-interest-yen and then invest the funds in American assets, benefiting from higher returns offered by the US market. However, such positions reflect a new sensitivity to market volatility—any sudden fluctuation or unexpected change in monetary policy could threaten the profitability of these transactions.

Uncertainty and Intervention Risks

Although the interest rate map clearly favors the dollar, the risk of Japan intervening to strengthen the yen remains a significant source of uncertainty. Central banks may take actions to modify exchange rates, which would shock investors who base their strategies on maintaining the current interest rate differential. Such scenarios highlight how susceptible the interest rate map is to geopolitical changes and banking policy decisions.