The dollar and yen: why they matter

Currency intervention: The Dollar and Yen why they matter - at Moneyweek.co.uk - the best of the week's international financial media.

Why is Japan intervening? Because it believes the yen needs to be held down to keep Japanese exports competitive. Thanks to a decade of deflation, Japan has suffered from anaemic consumer spending as households stave off spending in the expectation of lower prices in the future. As a result, Japan must look to its export sector to revive growth. A policy of intervention puts yen in the hands of foreigners, who are more likely to spend them than the Japanese themselves. At the same time, keeping the yen low helps the fight against deflation: it leads to higher import prices.

How much has Japan spent on currency intervention?

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