日元再度走弱，美国干预是否已失败？

Less than two weeks ago, the US Treasury intervened to defend Japan's currency, the yen, spending billions of euros buying up yen on the foreign exchange market. Originally, it looked like the intervention had sort of worked. The yen strengthened from 164 to the dollar to 156 and didn't move all that much in the week after. However, in the past couple of days, its decline has restarted. So, in this video, we're going to explain why the yen is still falling and whether the intervention has already failed.

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It then hovered there for the next couple of years with the Japanese government intervening to make sure it never really fell below 160. The end's decline probably has something to do with inflation, which averaged about zero in Japan between 1990 and 2020, but returned with a vengeance in 2022. Inflation obviously erodess the real value of the yen, which has undermined its appeal as a so-called safe haven. The usual remedy to persistent inflation and a weak currency is higher interest rates which reduce the money supply, hence less inflation and make it more attractive to save in that currency, hence a stronger currency.

Unfortunately, raising interest rates is difficult for Japan because higher interest rates mean higher borrowing costs and this is a real problem for the Japanese government because of its massive debt burden. Not to mention the fact that their borrowing costs are already skyrocketing. This is probably the main reason that Japan's central bank, the Bank of Japan or BOJ, hasn't raised interest rates as quickly as you might expect and has basically the lowest rates in the world.

This has put further downward pressure on the yen because it's made it more attractive to save cash in other currencies like euros or dollars. Anyway, this all came to a head a couple of weeks ago when after a series of expensive but ultimately futile interventions, the end finally slipped past 160, reaching a low of about 164 the week before last. And this, or more specifically the Friday before last, is when the US Treasury decided to intervene to prop the yen back up in coordination with the Japanese Ministry of Finance or MOF.

In practice, this meant the Treasury and the Japanese MOF buying up billions of yen on the markets with other currencies to make it stronger on foreign exchange. Interestingly, the US didn't intervene with dollars. They actually intervened with euros. No one knows exactly how much the US spent, but the total intervention came to about $50 billion. And the US has