The Yen's Endless Slide: A Cycle of Intervention and Futility The recent joint effort by Japan and the US to prop up the beleaguered yen has already begun to unravel, highlighting a deeper issue in the global economy: the futility of attempting to solve currency imbalances through intervention.
This cycle of intervention is now a trillion dollar question, no longer whether Tokyo and Washington can intervene effectively, but why they continue to do so despite knowing their actions are only temporary fixes.
The yen's weakness has been a steady downward trend since 2012, when it traded at around 78 to the dollar. Initially, this was a deliberate policy choice by corporate Japan – cheaper exports and rising profits.