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The price of currency intervention

January 21, 2004

"JAPAN'S Ministry of Finance has lost more than £40 billion in the past financial year trying to bet against currency speculators, The Times has learnt. Cabinet Office insiders admitted yesterday that the currency losses have spiralled out of control, after a renewed attempt by the Finance Ministry to prop up the dollar and talk down the value of the yen.... In trading in Tokyo yesterday it was clear that Japanese exporters were also preventing the massive currency intervention programme from succeeding. As the yen fell to Y107.50, a number of carmakers were understood to be dumping large amounts of their foreign-earned dollars on the market." I wonder how much longer they can pursue this failing strategy.

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