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Japan likely won’t intervene in the currency market to defend a line-in-the-sand such as 145 yen versus the dollar, and instead limit any further action to smoothing operations aimed at taming volatility, former top currency diplomat Naoyuki Shinohara said.
After the dollar’s spike to near 146 yen, Japan intervened in the currency market on Thursday to buy yen for the first time since 1998. Finance minister Shunichi Suzuki signaled readiness to step in again if yen moves become too volatile.
Shinohara, who oversaw Tokyo’s currency policy during the Lehman crisis in 2008, said any further yen-buying intervention will be limited in scale given Japan‘s need to avoid drawing criticism from G7 advanced nations.
“It’s unlikely Japan will continue intervening to defend a certain line, such as 145 yen to the dollar,” said Shinohara, who retains close ties with incumbent policymakers.
“It’s impossible to reverse the market’s broad trend with intervention alone,” he told Reuters in an interview on Saturday.
