Japan FM Confirms Intervention In Forex Market

Japan Finance Minister has taken a major step of intervening into the Forex (currency) market for the first time in six years in order to prevent rising Yen from periling bleak economic recovery of the country.

Since the yen is remaining high against the dollar by almost 2%, it may become a barrier in Japan’s economic recovery as Japan’s Prime Minister Naoto Kan’s administration has showed greater tolerance towards zooming Yen on concerns of acting alone without a support of the Group of Seven partners. Lack of clear direction from the PM Naoto Kan government encouraged further surge of the Yen against dollar, opined Analysts.

Finance Minister Yoshihiko Noda’s confirmation on Japan’s intervention into the currency market came on the behalf of the BOJ (Bank of Japan), which will act as a main player in the Forex.

Noda said, “We will take decisive steps if necessary, including intervention, while continuing to closely watch currency market moves from now on,” at a news conference that was quickly organized after the announcement.

US Treasury and Federal Reserve officials have not commented on Japan’s currency intervention move yet.

After achieving a 15-month high followed by Japan’s previous intervention in the Forex market, the currency Yen kept on rising against the dollar, creating a bitter situation for the Japanese economy. Since 1995, low interest rates hampered the dollar’s position encouraging the yen’s surge to reach the record peak of 79.75 per dollar in 1995 weighing the Japanese economy.

Nonetheless, it’s not only Japan’s developed economy that has decided to intervene in the Forex to boost the slow-running economy as in March 2009, the Swiss National Bank had stepped into the currency markets to stem the declining Swiss franc against the Euro. This move was a part of the Swiss Bank’s plan to curb the growing risk of the economic depression during 2009.

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