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Japan’s intervention in currency markets

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Japan has not intervened directly in the foreign exchange market in more than a decade, and it has not intervened to support its currency in more than two decades. The yen’s precipitous drop has investors concerned that Japan will intervene in the open market to support the currency.

A timeline of selected moves in FX markets by the Bank of Japan.

  • 1973 – Japan and its monetary authorities decide to allow the yen to freely float against the US dollar. 
  • 1985 – The Group of Five industrial nations, forerunner to the G7, sign the Plaza Accord, agreeing that the dollar is overvalued and that they will take steps to weaken it. 
  • February 1987 – Six of the G7 countries sign the Louvre Accord, which aims to stabilise currencies and halt the dollar’s general decline. 
  • 1988 – In Tokyo trade on January 4, the dollar falls to a post-World War II low of 120.45 yen. The Bank of Japan steps in to purchase dollars and sell yen. 
  • 1991–1992 – The Bank of Japan intervenes to support the yen by selling dollars.
  • 1993 – The Bank of Japan sells yen for much of the year in order to weaken it. 
  • April 1994 to August 1995, the dollar falls to a post-war low against the German mark and a record low against the yen. The US intervenes repeatedly, often in collaboration with Japanese and European central banks, to keep the greenback afloat. 
  • 1997–1998 – The Asian financial crisis causes the yen to fall to nearly 148 to the dollar in August, despite the fact that US authorities join the Bank of Japan in buying yen. 
  • January 1999 to April 2000, the Bank of Japan sells yen at least 18 times, including once through the Federal Reserve and once through the European Central Bank, due to concerns that a strong yen will stymie economic recovery. The yen is strengthening further. 
  • September 11, 2001 – Following the September 11, 2001 attacks in the United States, the Bank of Japan intervenes to sell yen. Both the ECB and the New York Federal Reserve act on behalf of the BOJ. 
  • May-June 2002 – The Bank of Japan intervenes to sell yen, which is frequently supported by the Federal Reserve and the European Central Bank. The yen continues to rise in value. 
  • March 2004 – The end of a 15-month campaign to restrain the yen’s rise, during which Japan spent 35 trillion yen, or more than $300 billion, on intervention. 
  • September 15, 2010 – Japan intervenes in the currency market for the first time in six years, selling yen to halt a currency rise after the dollar reaches a 15-year low of 82.87 yen.
  • March 18, 2011 – The G7 nations work together to keep the yen from reaching a record high in the aftermath of a massive earthquake, on speculation that Japanese firms would repatriate foreign assets to pay for reconstruction. 
  • August and October 2011 – Japan intervenes to limit gains that officials fear will derail recovery from the March earthquake and tsunami.