If aliens came down to observe global financial markets they would conclude that we must be insane: case in point the price action of the Yen. It bewilders the intellect that the Yen remains the strongest the currency in the world despite continuous money printing, ultra low interest rates, and an egregiously high debt to GDP of around 220%. If that was not enough to ensure a weak currency, the BOJ and Ministry of Finance openly state they want a lower Yen. Yet in our current bizarro world, the Yen is the ultimate safe haven go to currency during economic turmoil. Reuters is now reporting that the Japanese government and BOJ are again considering ways to weaken the Yen, including direct currency intervention to sell the Yen. This is not a new strategy---from 2000-2004 the BOJ constantly intervened to sell the Yen. Did it work? No but that did not stop them from wasting hundreds of billions trying. Intervention almost always fails as the SNB (Swiss Central Bank) will tell you as they lost around $8 billion trying to weaken the Swiss franc. Central bank intervention only works when it is coordinated by the G-7 like the successful attempt to prop up the Euro in 2000. That was one of the few currency interventions that worked. The BOJ is destined to fail. Who knew it was so hard to debase a currency?
Three month chart of Yen Futures
Black Swan Insights