On Wednesday, the 15th of September 2010, the Japanese government intervened in the international currency markets for the first time since 2004. Because Japan is an export-led economy, they moved to weaken their growing yen, while also raising the value of the dollar. The officials who are in charge of managing the Japanese economy have recently purchased United States dollars and sold Japanese yen. An intervention in the economy is a surprise to some, since Prime Minister Naoto Kan, who on Tuesday won a party-wide race, hasn’t talked much of intervening in the economy. The article points out that it’s also a surprise to some because of the recent trends of countries and their economies. Countries have of late been trying to stay out of market intervention, and rather are attempting to allow the markets to sort out themselves. However, the Japanese have felt the need to intervene since the yen had reached a 15-year high, which hurts its export-based economy. While this move as helped weaken the yen since other investors are selling their yen, keeping the yen from eventually moving back up will be difficult. Other countries also want to keep their currency on the weak side to boost up their exports, so they won’t want to buy Japanese currency. That said, other leading countries are supportive of Japan, because a weaker Yen helps them out too. For example, a strong yen will end up making overseas exports much more expensive, and lowers the value of overseas earnings when they return to the Japanese economy. For an economy based on its exports, a weaker currency is a must.
http://www.nytimes.com/2010/09/16/business/global/16yen.html
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