Last week, the Japanese yen continued to strengthen at a rate uncomfortable to leaders. As a result, earlier today, the Bank of Japan decided to directly intervene in order to keep the yen lower.
Monday’s intervention marks the third time in 2011 that the Japanese have intervened to keep the yen from strengthening too much. The unilateral intervention was announced by Finance Minister Jun Azumi at 10:25 a.m. Japan time.
The last time Japan intervened to keep the yen lower was in August, and the intervention didn’t do much to keep the yen down long term. However, there are hopes that this intervention will let Forex traders know that Japan is serious about a weak currency right now. Some believe that the Japanese should just embrace yen strength, but companies have already felt the financial pinch as a result of a stronger yen.
For now, the Japanese continue to prefer the export advantage helped by a weaker yen. Plus, a weak currency will be helpful as Japan continues to rebuild areas damaged by the earthquake and tsunami back in March.
At 12:48 GMT, USD/JPY is higher, as expected. The pair has moved to 78.00 from the open at 75.69. EUR/JPY is gaining, at 109.14, up from the open at 107.11/ GBP/JPY is also higher, up to 125.07 from the open at 122.09.
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