Japan Intervenes in Foreign Exchange to Curb Yen's Slide

Photo: wsj

The Facts

  • In its first foreign exchange intervention in roughly 11 years, on Thursday, the Japanese government and its Bank of Japan (BOJ) began selling US dollars to boost the yen. The yen had fallen to its lowest value in 24 years.

  • Following this move, PM Fumio Kishida asserted in a speech at the New York Stock Exchange that further interventions are likely in case speculation causes "any excessive volatility."

The Spin

Pro-establishment narrative

This surprise and rare market intervention is a much-needed response from the Kishida administration. This will help to tackle rising import costs, which have been damaging Japan's economy. The government has been actively weighing options to reduce volatility and is carefully walking a fine line to achieve the best results.

Establishment-critical narrative

Selling dollars isn't enough to restore the yen's value. The impacts of this intervention will be limited as Japan won't be able to keep intervening for much longer. To deliver a solution to its weakening currency, the Bank of Japan must follow the example of the Fed and many other central banks and raise rates.

Establishment split



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