Japan’s increasingly incongruous policy stance aimed at securing both stable growth and inflation is adding to the likelihood of further yen losses, even as officials warn of possible intervention.
Just this week, as Finance Minister Shunichi Suzuki was warning he would step into markets to shore up the currency if needed, the Bank of Japan was boosting bond purchases to keep yields low — a move that widens the policy differentials with the rest of world and weakens the yen.
The central bank spent ¥1.42 trillion ($9.9 billion) on government debt to protect its artificially low yield cap on Wednesday and Thursday alone. Even after taking the passage of time into account, that sum dwarfs the ¥231 billion the country used the last time it intervened to support the currency in June 1998.
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