- Pro-PRC Laowai
- Sep 30, 2004
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by toby
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Yes, the primary concern is the strong Yen hurting exports.
As for Japan's previous Yen interventions, I casually dug around the internet and found 4 explicit instances of the Bank of Japan intervening to weaken the yen prior to the most recent one. I might be missing something because central banks intentionally use the same or similar terminology for different policy actions and news organizations follow them, adding to the confusion. Seriously, gently caress central-bank-anese.
- September 2010 - Y2 Trillion (~$25 Billion) [Note: first time the BoJ intervened since 2004]
- March 2011 - Y2 Trillion (~$25 Billion) [Note: combined intervention of G7 in the wake of Tohoku earthquake]
- August 2011 - Y4.5 Trillion (~$59 Billion)
- October 2011 - Y8 Trillion (~$100 Billion)
Here’s a chart of USD to JPY exchange rate for the time period. For laughs, 82 yens-per-dollar was suppose to be the do-not-cross exchange rate.
Generally speaking, the interventions haven’t stopped the Yen appreciation (getting stronger) against the US dollar. The Yen does weaken temporarily immediately after the intervention, but then it bounces back after a few days. This current intervention is not negligible compared to previous interventions but is actually par for the course (it's ~Y10 trillion). However, that doesn't bode well for its success given how the similarly sized intervention in October 2011 didn't do much to stop the Yen's appreciation.
As to why the interventions fail, the most plausible explanation I've heard (please note that I don't know poo poo) is that there's a strong demand for Yen assets. Even with its massive debt, political inability, deflation, etc., Japan is still better off than many other developed economies, so it has a perception of being a "safe haven." The world keeps getting more and more uncertain (economically speaking) so people keep piling onto safe things, namely US Treasuries and, I guess, Japanese bonds. If someone has a better explanation, please bring it up because, seriously, I don't know poo poo.
Look into: The Yen Carry Trade, which kept the Yen cheap (and relies on it being cheap), which then fell apart in 2007 and was followed by the reverse yen carry trade (which banks on the exact opposite happening).
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Sep 23, 2012 02:51
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May 5, 2024 07:48
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- Pro-PRC Laowai
- Sep 30, 2004
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Supposedly there is also undersea oil and gas there. I suspect that's the real reason for the dispute.
Except that the dispute has been going on for decades now.
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Sep 25, 2012 23:47
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Sep 23, 2012 02:51
