Japan inadvertently intervenes to soften yen


The Japanese yen (JPY) is still “relatively” strong, but it has weakened by a pretty significant amount against the US$, nearly 10 points, in recent weeks. With much buzz of yen intervention leading up to the recent softness, one would have thought the MoF ran out of patience and intervened. Well, in fact, it kind of did in a sense, since the now disgraced former Finance Minister Nakagawa couldn’t handle his glass at the G20; and the latest Japanese political news scandal involves a case of potential campaign contribution fraud by the opposition party — maybe now is the JCP’s chance. So, with Japan so concerned about “reputation risk,” one would assume a national policy would call for carefully cultivating it. However, in addition to the above, the musical chairs of inept prime ministers post-Koizumi and the ceaseless political gaffes, have instead resulted in carelessly damaging Japan’s reputation. Should the yen find relative strength again — and it just might considering the basket case of currencies out there — unless there are more snafus within the GoJ, then I continue to believe there should be no deliberate intervention since it would still be premature at this point given deteriorating global economies.

Yen ETFs traded in the U.S.:

CurrencyShares Japanese Yen Trust [[FXY]]
Ultra Yen ProShares [[YCL]]
UltraShort Yen ProShares [[YCS]]