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Interventions and Japanese Economic Recovery

Takatoshi Ito ()

Hi-Stat Discussion Paper Series from Institute of Economic Research, Hitotsubashi University

Abstract: This paper attempts to explain possible reasons and objectives behind the 35 trillion yen (7% of GDP) interventions conducted by the Japanese monetary authorities from January 2003 to March 2004, and to discuss whether the interventions achieved the presumed objectives: making the movement of the yen flexible but orderly, and helping economic recovery. The motivation of starting intervention in January 2003 was to keep the yen from appreciating in the midst of financial and macroeconomic weakness. The economy started to show some strength in the second half of 2003, but interventions continued, with a brief pause in September. Reasons for interventions after September are two-fold. First, the interventions provided opportunities for unsterilized interventions. Second, the monetary authorities were extremely sensitive to speculative activities in the market.

Keywords: Intervention of foreign exchange market; the yen; monetary policy; Japanese economy (search for similar items in EconPapers)
JEL-codes: E44 E58 F31 (search for similar items in EconPapers)
Date: 2005-06
New Economics Papers: this item is included in nep-mac and nep-sea
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