Japan Eyes Currency Intervention as Yen Plummets 7% in Q3
Tokyo scrambles to stabilize markets as the yen's freefall triggers alarm bells.
The Japanese currency's worst quarterly performance since 2022 has policymakers reaching for the FX playbook. With a 7% nosedive against the dollar since August, officials are now openly debating market intervention - that classic move where governments pretend they can fight global macro trends.
Why this matters: When the world's third-largest economy starts sweating over currency moves, crypto traders should pay attention. Bitcoin's 24/7 volatility suddenly looks tame compared to fiat currencies getting whipsawed by central bank politics.
Behind the scenes: Japan's Ministry of Finance knows the drill - pump billions into buying yen, issue stern warnings, then watch speculators test their resolve. It's the financial equivalent of bringing a squirt gun to a currency war.
The irony? While Tokyo frets over 7% moves, crypto natives would call this 'Tuesday'. Maybe they should try a Bitcoin standard - at least the volatility comes with 10x upside potential.
Japan’s cheap yen hits home, triggers fresh political heat
The weak yen might be a win for tourists and exporters, but it’s killing local households and small businesses. Japan depends on imported energy and raw goods. When the currency sinks, the costs rise.
That’s inflation in plain sight. Food, fuel, electricity; all more expensive. And people aren’t getting raises to match it. This squeeze already helped push out two prime ministers before Takaichi. If things keep going this way, she’ll be walking a tightrope too.
There’s also heat from across the Pacific, as US president Donald TRUMP has been ripping into Japan, claiming the weak currency gives its companies an unfair edge in trade. That same argument came up again in recent talks between Tokyo and Washington.
If the slide continues, Japan might intervene. That decision comes from the Finance Ministry, and the Bank of Japan carries it out through selected commercial banks.
The plan? Buying yen, dumping dollars. How big and how fast depends on what kind of reaction they want. To fund it, they’ll tap into foreign reserves.
By end of October, Japan held around $1.15 trillion, mostly in cash and U.S. Treasuries. Last year, they even sold off some Treasuries to cover intervention costs when the yen hit 160.
Finance Minister Satsuki Katayama told parliament on Wednesday that they’ve seen “one-sided, rapid currency moves” and warned that “the negative aspects of the weak yen are becoming clearer.”
Satsuki also stressed that the Japanese government is watching “with a high sense of urgency,” and a level of concern that hasn’t been public since July 2024 when Japan’s government burned through nearly $100 billion intervening in the yen’s crash. Every time the yen touched 160, action followed.
But they don’t always admit they’ve stepped in, and that’s part of the game. The ministry usually confirms the total spending at the end of each month.
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