Japan Has Not Intervened in FX

In line with other Asian authorities’ attitudes towards online forex trading, Japan has not intervened in the forex market to help the yen appreciate. In fact, Japanese monetary authorities have not ventured into the forex market since March 2004, when 30 trillion yen ($315.1 billion) was spent to stem the yen’s appreciation. As a result of the government’s reticence, the yen has not been able to regain the 13-year high against the USD that it hit earlier in October 2008.

Although Japan’s forex reserves topped the one-trillion mark in late November, the government may have been reluctant to shore up the yen due to deteriorating global economic conditions which caused Japanese exports to fall 35% in December and deflated earnings back home. Toyota, Sony, and Honda have all announced cutbacks and layoffs as well.

Japan’s Finance Minister, Shoichi Nakagawa, said that authorities should be prepared to deal with undesirable market volatility if needed. In late January 2009, Japan’s Vice Finance Minister for International Affairs Naoyuki Shinohara told reporters, “We are closely monitoring movements in the currency market” but declined to comment when asked if Japan would curb the yen in the future.  The government’s laissez-faire approach was reinforced when the Bank of Japan recently voted to keep the benchmark rate at 0.1%.