The Great Currency Intervention

What next for the Yen?

The mighty Yen was approaching another breaking point when the currency market suddenly erupted. What followed was not simply another Japanese attempt to slow the decline, but a coordinated intervention carrying implications far beyond USD/JPY.

Why did Washington step in, why was the US Treasury market central to the decision, and what assurances may Tokyo have given in return? In this article, Macro D examines the political and financial logic behind the intervention, the growing pressure on the Bank of Japan to tighten policy, and why the latest move may have changed the outlook for the yen more fundamentally than previous interventions.