Japan will struggle to rescue its plummeting currency

Expensive government intervention looks likely to provide only brief respite


  • by
  • 04 29, 2024
  • in Finance and economics

The yenBJBJ is on a wild ride. As Asian markets opened on April 29th, the currency plunged to a 34-year low of 160 to the dollar, adding to a hefty fall over the past three years (see chart). A sudden reversal to more like 155 to the dollar prompted rumours of intervention by the Bank of Japan (o).Confirmation will come with a delay, but preliminary data, based on the balances financial institutions hold at the central bank, suggest the o may have spent over $30bn to strengthen the exchange rate. After subsequently weakening, the yen surged again on May 1st, raising more eyebrows among currency traders.

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