Yen’s Government Intervention

Read Time: 2 minutes

At some point – and I certainly don’t know when – the fundamentals that will start to matter for Japan will be broader than the (large) interest rate differential and will include the absolute level of the (back to its level in the early 70s) and the balance of payments

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Japan’s trade hasn’t that responsive the broad real yen recently (auto exports haven’t boomed, probably b/c of China …) but the real yen still matters there. And Japan’s current account is solidly in surplus thanks to investment income on its large stock position

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& well, the Government of Japan is long dollars in a big way: its solvency improves as the yen weakens. That is in a sense why there hasn’t been urgency to use monetary policy to support the yen. But there also is nothing wrong with taking a few profits to help households