NEW YORK (CNNMoney.com) -- The Japanese government has decided to intervene in the currency markets in an effort to rein in its skyrocketing yen. In a somewhat rare move, Japan's Ministry of Finance announced that it would sell yen and buy U.S. dollars.
It remains to be seen whether Tokyo can actually control the yen over the long-term though. Damon Vickers, managing director at Nine Points Management & Research, a hedge fund in Seattle, said that governments have a spotty history of success when they impose their weight on the currency markets.
"In spite of intervention, the forces driving the yen higher are likely stronger than the government," said Vickers, in an e-mail to CNNMoney.com.
"Japan doesn't want a higher yen as it will make their exports more expensive, crimping growth, sales, earnings and the population's employment," Vickers said.
Dean Popplewell, chief currency strategist for Oanda, a Toronto-based online trading platform, called the Japanese intervention a "zero sum game of profitability for exporters" in an "export-dominated society."
"The rumor in the market is that they've spent about 17 billion yen [buying U.S. dollars,]" he said.
This could be an expensive undertaking for the Japanese government. Popplewell said the last time the Japanese government intervened in such a way, back in 2004, it spent about 100 billion yen buying up U.S. dollars.
"The Bank of Japan will actually have to spend oodles to deflate their own currency," he said. "Will the momentum of the weakening of the yen be sustainable? There will be a time the market will want to take on the Bank of Japan, to see how serious they are in [deflating] their currency."
|Overnight Avg Rate||Latest||Change||Last Week|
|30 yr fixed||4.12%||4.00%|
|15 yr fixed||3.14%||3.00%|
|30 yr refi||4.17%||4.06%|
|15 yr refi||3.21%||3.09%|
Today's featured rates:
Russia's economic turmoil has already spread to companies in the West and many brands are bracing for a bigger blow to earnings. More
The shale boom has been a blessing to Texas, but tumbling oil prices are casting a shadow over the state. More
Portland's mayor says the city will create new rules, eventually allowing Uber to operate there. More
With two recent IPOs and a digitally-inclined audience of entrepreneurs, non-traditional financing could finally get its big break. More
Payday lenders are spending millions of dollars in Washington in an attempt to get powerful politicians on their side as a government crackdown on the industry heats up. More