Even though Monday is an official market holiday in Japan, their currency plunge protection team apparently canceled their day off.
And for good reason.
During the Sunday evening hours US time, the Japanese Yen (JPY) fell to 160 against the Dollar.
While officially intervention reports yet remain unconfirmed, the JPY suddenly and precipitously made two major jumps to strengthen to around the 155 level as shown by the two, downward red bars in the chart below.
These kind of moves are highly irregular given Japan is the world’s third largest economy.
However, the JPY refuses to halt its weakening trajectory as its currently moving back down from the 155 to nearly 157 JPY to the USD as also shown in the chart below.
It’s estimated that Japan spent about $35 billion of its dollar reserves to buy the Yen in its effort to stem further JPY weakening.
This is the first JPY currency intervention since 2022.
Clearly, Japan’s currency plunge protection team is going to have to spend a whole lot more of their Dollar reserves for any meaningful effect.
Yet it’s unlikely to keep the JPY from its continuing fall.
The only meaningful solution is for the central bank of Japan to raise short term interest rates.
Oh wait, Japan’s debt to GDP is 255%. Raising interest rates will make Japan’s public debt costs even more unsustainable.
The fiat currency debt system continues moving towards its logical conclusion.
