Japan Launches Campaign to Weaken Yen
August 4th, 2011Warning: This is not a recommendation to buy, sell or hold any financial instrument.
It’s starting (again):
At a minimum, states will try unilateral capital controls in an attempt to prevent their currencies from disorderly appreciation vs. the toxic dollar.
Via: Wall Street Journal:
Japan stepped into the currency market Thursday, launching a yen-selling campaign that was backed up by ¥10 trillion (nearly $126 billion) in easing measures from the central bank, as officials say they needed to tame market speculation threatening a fragile economic recovery.
But even as authorities plowed money into the markets, traders and analysts said it was far from certain that the authorities would succeed in heading off the yen’s steady climb.
The government plunged into the market Thursday morning via the Bank of Japan, causing the yen to drop against other key currencies. The dollar quickly jumped to ¥78.20 from ¥77.13 and the euro rose to ¥111.80 from ¥110.72.
To underscore its conviction, the government continued selling yen through the day, pushing the dollar to ¥79.48. Mid-afternoon Thursday in Asia, the dollar was at ¥79.44.
Finance Minister Yoshihiko Noda said at a hastily called news conference the measure was meant to stop speculative, excessive yen moves.
“If this movement continued, it would have adverse effects on the stability of Japan’s economy and financial conditions at a time when Japan is making various efforts to recover from the [March 11] disaster,” Mr. Noda said. The March 11 earthquake and tsunami severely disrupted corporate Japan’s supply chains, while the damage to its Fukushima Daiichi nuclear plant has led to power supply constraints.
Related: Switzerland Tries to Slow Rise of Franc; Cuts Interest Rate
