The Japanese Yen has appreciated against the US dollar by 9% in the last 10 days. As a result, Japan’s exports in April dropped by 10.1% YOY due to the rising price of exported goods. This prompted the Bank of Japan, the central bank, to intervene in the market.
This involvement will continue although it got a rebuke from the other G7 countries who regard it as a violation of the “no competitive Devaluation” commitment (prohibition of devaluation for the competition). Japan argues that this does not mean there should be no interference at all, let alone by Japan’s unnatural movement.
This appreciation may be due to the Japanese people who are trying to send the revenues originating abroad when the yen was weak (repatriation). Hence the demand for yen increased. This is because the Japanese businessmen no longer trust the government policies that have repeatedly failed, let alone the last policy to lower interest rates to negative. If so, then the mediation will be futile.
Add Comment