Japan’s Intervention Will Bring Little Relief to Flailing Yen
- Reports of authorities being in the market getting more common
- Slide highlights diverging yield trajectories with BOJ on hold
Japan has reportedly spent billions in propping up the flagging yen. However, unless the nation’s inflation-adjusted yields improve, the authorities will find that their efforts are akin to putting a Band Aid on a severed artery.
First, the facts -- or at least what the media thinks really happened toward the close of trading last week. USD/JPY, which was approaching 152, made a sudden descent. One that would take it to almost 146 within just a couple of hours, a pace of decline that one wouldn’t normally see in the absence of significant news. Estimates by money broker Central Tanshi Co. suggest that the Japanese authorities spent as much as 5.5 trillion yen (almost $37 billion ) propping up the yen. (Earlier Tuesday, Kyodo reported another intervention on Monday that ostensibly was worth several hundred billion yen.)