History of Bank of Japan Interventions

BoJ Interventions 2009-2011: 

Japanese exports had clearly been harmed by the strong yen in the years 2009 to 2011, visible in the weak export performance, especially compared to its competitor Korea. Still it seems that most of the bad performance vanishes when the export values are translated in US dollar.

Japanese Exports and Exchange Rate 

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Interventions 2009 and BoJ Assets

“All investors know that intervention will not stop the yen strength,” Yuuki Sakurai, chief executive officer at Fukoku Capital Management Inc. in Tokyo, which manages $7.3 billion of assets, said in a telephone interview on May 30. “Intervening at this stage would be unwise and a waste of money. As long as Europe remains in a state of confusion, yen will continue to be bought for its relative safety.”

Japan sold 14.3 trillion yen ($183 billion) last year, the third-most on record, Ministry of Finance data show, to slow the currency’s gains after the country was struck by an earthquake and the worst nuclear crisis in a generation.“All investors know that intervention will not stop the yen strength,” Yuuki Sakurai, chief executive officer at Fukoku Capital Management Inc. in Tokyo, which manages $7.3 billion of assets, said in a telephone interview on May 30. “Intervening at this stage would be unwise and a waste of money. As long as Europe remains in a state of confusion, yen will continue to be bought for its relative safety.”

Bank of Japan Assets

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Ridiculous intervention thread

Looking at the history below, the intervention is pretty ridiculous. The Bank of Japan did interventions only when USD/JPY was under 80.

With interventions at  USD/JPY of 105 or more, the central bank risks its solvability.

Bank of Japan Interventions 2001-2011

We show the history of Japanese FX interventions. The Japanese only intervened when the USD/JPY was under 80. Therefore the 2016 FX intervention threads at 108 are ridiculous. As opposed to the Swiss National Bank, the Japanese only talk, they do not fight. - Click to enlarge

during 2010 and 2011.

Bank of Japan Interventions in 2011

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March 2011: Tsunami

The FT shows the series in time when the Bank of Japan intervened, the biggest one in March 2011, when all major central banks helped the BoJ.

Foreign exchange interventions since 2008 have largely resulted in financial losses for the SNB and the BoJ. Both central banks stepped up their intervention programmes in an attempt to counter ‘safe-haven’ demand that saw their respective currencies appreciate significantly against the euro and US dollar. Since 2008, the Swiss franc has appreciated 27 percent against the euro (and 15 percent against the US dollar). Since 2008, the Japanese yen has appreciated 29 percent against the US dollar (and 39 percent against the euro). (source RBNZ)

Dollar Yen 2007 to 2011

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SNB does FX Interventions still today

But the Japanese did far less FX interventions than the Swiss National Bank: In 2013 FX reserves accounted for 3.1% of the BoJ Balance Sheet.

They were far more afraid than the Swiss, as we showed in SNB Remains the Only Central Bank Currency Warrior: The Japanese do not Fight, they Talk