Yen Capitulation Awakens Intervention Ghosts: Chart of the Day
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The yen’s collapse to a seven-year low, driven by the central bank’s determination to kill off deflation, is driving the exchange rate toward levels that led Japan’s government to support the currency in the 1990s.
The CHART OF THE DAY shows the yen heading toward the threshold that triggered intervention in 1991, 1992, 1997 and 1998, when the government sold dollars to halt the implosion. The Japanese currency was weaker than 125 per dollar before each move. It stood at 115.49 yesterday in New York, after reaching 116.10 on Nov. 11, the lowest since October 2007.