In response to the rapid depreciation of the yen, the government and the Bank of Japan decided to intervene in the market on the 22nd, selling the dollar and buying the yen for the first time in 24 years.


The authorities are willing to intervene further to put a brake on the unilateral depreciation of the yen. How is this market intervention seen overseas?


We spoke to economists and experts.


(Washington bureau reporter Takuya Odashima / American bureau reporter Daisuke Ezaki / London bureau reporter Hiroko Matsuzaki)

In the Tokyo foreign exchange market on September 22, the yen temporarily depreciated to 145.90 yen to the dollar. We have decided to intervene in the market to buy.

Partly due to the effect of the intervention, the yen exchange rate temporarily rose by more than 5 yen to 1 dollar = 140.31 yen that evening.



After that, the New York foreign exchange market on the 23rd ended trading at the low 143 yen level to the dollar.



I know that this intervention was a single Japanese intervention.

On the 22nd, the U.S. Treasury Department clarified that it was not involved in the intervention in an interview with NHK, and said, "We understand that the purpose is to suppress fluctuations in the yen exchange rate, which has been rising recently." It suggested that the market intervention was virtually accepted after consulting with the side.

Why did the US government tolerate Japan's market intervention?



Professor William Grimes of the Paldi School of Boston University, who is familiar with Japanese monetary policy, analyzes as follows.

"The friction between Japan and the United States over market intervention occurred when they tried to induce the yen to depreciate. The United States does not complain about cases like this, which are aimed at inducing a strong yen. It spreads worldwide. Considering the excessive strength of the dollar, it would be a very welcome move for the United States.”

Also, Professor Robert Deckle of the University of Southern California, who is familiar with the Japanese economy and the Asian economy, also said that the reason why the US government accepted it was because he thought that the too strong dollar was hurting US exports.

Professor Deckle then points out:



“Intervention is a good idea, but the effect will not last long, as the yen is depreciating and rising import prices are hurting Japanese consumers and businesses. We will have to raise interest rates.”

Professor Grimes also analyzed, "The BOJ will almost certainly raise short-term interest rates after Governor Kuroda leaves office. Going forward, the focus will be on when the BOJ will change its long-term interest rate management."

Carl Weinberg, chief economist at High Frequency Economics, a research firm in New York that reports on trends in financial markets, said he believes the rapidly depreciating yen cannot be reversed. I'm here.

“The history of foreign exchange intervention has been a series of failures, and there are almost no examples of success in correcting the trajectory. We are unlikely to be able to convince the market to change course to a stronger yen."



Weinberg gives three reasons for the rapid yen depreciation.



▽The difference in interest rates between Japan and the United States that has widened to a historic range


▽Japan has a trade deficit


Japan's population is declining and the economic growth rate is low .



When you buy yen from the market, you have less yen left and put pressure on yen interest rates to rise, which is the opposite of the current massive monetary easing by the Bank of Japan, which keeps yen interest rates low, and works well. It's unclear whether or not," he said.

Hidetoshi Honda, senior strategist at Mizuho Bank's European treasury department in London, is also skeptical that the effects of market intervention will last.



“Market intervention as a treasured sword of the family is most effective while threatening, and often becomes less effective when it is removed. It has spread".

Mr. Honda said, "The biggest reason for the recent depreciation of the yen is that the United States is working hard to raise interest rates, while Japan is desperately trying to curb interest rate rises. The contrast is even clearer. From the market's perspective, it seems contradictory that the Bank of Japan is desperately trying to curb interest rate rises, and as a result, the yen is depreciating, while the Ministry of Finance intervenes to buy the yen and try to curb the yen's depreciation." I was talking to