What does $4 trillion a day in business, never sleeps and sees Japan’s Ministry of Finance as just one more patsy?
The foreign exchange market, of course, which is licking its collective lips as Japan embarks on another round of unilateral intervention to sell the yen in an effort to drive down its value and protect its export-oriented economy.
There are going to be two big winners in this, and neither begins with a “J.”
Speculators will, as ever, benefit from having a deep-pocketed trading partner who has been so kind as to draw a bull’s-eye on his own forehead and tell everyone at what level he will act. For Japan, that level appears to be just below 83 yen to the dollar and the Ministry of Finance has already spent $20 billion moving it back to above 85 to the dollar.
Not a bad first day’s effort but let us recall that the last time Japan decided to mess around in currency markets without international support it ended up spending well over $300 billion between 2003-2004, a period when the yen actually appreciated by more than 13 percent.
Switzerland engaged in a similarly painful exercise in driving down the value of its franc earlier this year, shelling out something on the order of $210 billion but seeing the currency actually increase in value against the euro , its main trading partner, by about 14 percent.