Exchange Rate interventions by Bank of Japan

Code : INB0016

Year :
2011

Industry : Banking

Region : Japan

Teaching Note:Not Available

Structured Assignment :Not Available

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Introduction:On Sep 15, 2010, the Japanese government confirmed the exchange rate intervention by Bank of Japan(BOJ), sparking a fresh round of debates among economists, government officials, and market practitioners. The BOJ also confirmed the intervention -- reported to be in the 1.7- 1.8 trillion range. It was Japan's first intervention in the global currency markets in the six years, the last exchange rate intervention having been in March 2004.

The Japanese government had a history of interventions in the currency market. Through the intervention in September 2010, Japanese officials had tried to depreciate the yen. In the second week of September 2010, the yen touched a 15-year high against the dollar, going up to 79.75 against the US dollar. This intervention weakened the yen against dollar and raised quickly the US dollar from 82.87 to 85 yen. According to the Chief Cabinet Secretary Yoshito Sengoku, the safer limit that the Japanese government had decided on was 82 Yen per dollar. The forex market intervention decision on Sep 15, 2010, moved the Nikkei 225 stock average up by 217.25 points, or 2.3 percent, to close at 9,516.56. The share prices of leading Japanese companies also rose by 3 percent...

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