Source: Economic Reference News Japan's Ministry of Finance announced on the 22nd that due to the drastic changes in the exchange rate of the yen against the US dollar, the government implemented exchange rate intervention on the same day. This is also the first time that the Jap

Source: Economic Reference News

Japan's Ministry of Finance announced on the 22nd that due to the drastic changes in the exchange rate of the yen against the US dollar, the government implemented exchange rate intervention on the same day. This is also the first time that the Japanese government has intervened in the weakening of the yen since June 1998, and has carried out operations such as buying the yen and selling the US dollar.

. The media and experts did not become optimistic about whether the yen can stop the decline and stabilize in the next step. Most views believe that the effect of exchange rate intervention remains to be seen, and many experts also pointed out that the exchange rate intervention is difficult to change the trend of the yen continuing to weaken.

Since the beginning of this year, the Federal Reserve has repeatedly raised interest rates in order to curb inflation. The Bank of Japan is trapped by the reality of weak domestic demand and weak economic recovery, and is forced to stick to the loose monetary policy beyond . The yen exchange rate has been falling sharply.

Recently, the central banks of Western countries once again intensively raise interest rates, further increasing the pressure on the depreciation of the yen. Among them, the Federal Reserve issued its fifth interest rate hike decision this year on the 21st; Switzerland 22 announced the second interest rate hike this year and left the negative interest rate hi.

On September 22, the exchange rate of the yen against the US dollar fell from 115 yen to 1 US dollar at the beginning of the year to the 145 yen range, setting a 24-year low, and the depreciation within the year exceeded 25%. In the afternoon of the same day, the Bank of Japan Governor Kuroda Haruhiko held a press conference to elaborate on the Bank of Japan's view that the Bank of Japan puts the priority of maintaining economic recovery and adheres to the ultra-loose monetary policy, and said that it is not considering hikes at present. It also said that what is said here is "at this time "can be understood as not a few months, but maybe two or three years."

After the press conference, the yen exchange rate fell rapidly and once approached the 146 yen mark. In order to prevent the yen from continuing to fall, the Ministry of Finance intervened in the exchange rate around 17:00 Tokyo time, and the exchange rate of the yen against the US dollar once rebounded to 140.78 yen against 1 US dollar. Some market insiders pointed out that although the sharp depreciation of the yen has temporarily eased, the interest rate gap between Japan and the United States will not narrow, and the Federal Reserve has already hinted that interest rate hikes may continue until next year. In addition, Japan's huge trade deficit in has lasted for more than a year, and the momentum of private funds flowing overseas is becoming increasingly obvious. Against this background, Japan only relies on intervention measures to curb the weakening of the yen, with limited results.

Before intervention, the Japanese government's attitude towards the sharp depreciation of the yen went through a process of change. The initial statement was that the depreciation of the yen was beneficial to the Japanese economy as a whole, and then the government did not want to see a sharp fluctuation in the exchange rate, which gradually evolved into severe verbal intervention, saying that the government was ready and would take action at any time.

According to " Nihon Keizai Shimbun ", a US Treasury Department spokesperson said that the United States expressed understanding of the actions taken by Japan, but did not participate in Japan's exchange rate intervention actions. Experts analyzed that without the coordinated actions of the United States, Japan's independent intervention in the exchange rate will be limited. In particular, this exchange rate intervention is not facing the appreciation of the yen, but the dilemma of a sharp depreciation of the yen. The government needs to achieve it by selling the US dollar, which is subject to the limit of the amount of "ammunition".

As of the end of August, Japan's foreign exchange reserve balance was US$1292 billion, mainly composed of bonds, cash deposits, gold, etc. Among them, , U.S. bond accounts for the largest proportion, with a total amount of more than US$1 trillion. The dollar cash that can be used for exchange rate intervention is only US$136.1 billion.

Experts analyzed that it is easy to intervene in appreciation, but it is difficult to intervene in depreciation; it is easy to coordinate with multiple countries, but it is difficult to intervene alone. What Japan is currently facing is the dual problem of intervening in the depreciation of currency alone. At the same time, the strong interest rate hike of the United States has triggered a global "rate rate hike" and the pressure on the depreciation of the yen is huge. The Japanese government's solemn exchange rate intervention, which was carried out at its own expense, was not optimistic.

JPMorgan Chase 22 report pointed out that judging from the effects of foreign exchange intervention in Japan in the late 1990s, the initial market response is likely to be the largest, and the effect gradually weakens as the number of interventions increases. The final result of this foreign exchange intervention is probably futile.