On September 22nd, for the first time since June 1998, the Japanese government and the Bank of Japan intervened in the exchange rate to purchase yen. Masato Kanda Financial Management of the Japanese Ministry of Finance made the official announcement.
Kanda expressed concern over the excessive volatility in the market and said, “I am concerned about this rapid, one-sided movement in the current foreign exchange market, partly against the backdrop of speculative activity.” He said, “Yes, it was an intervention,” when pressed to confirm.
Kanda emphasized that the foreign exchange market would be closely watched and that the government would do everything in its power to address any problems that arose.
The divergence in monetary policy between Japan and the United States served as a catalyst for the weakening of the yen and the strengthening of the dollar. The Japanese government intervened in the exchange rate to prevent a sharp depreciation of the yen as rising import prices weighed heavily on families’ budgets. Due to the intervention, the yen’s value briefly reached around 140 to the dollar.