Japan tries to rein in rising yen

chart_ws_currency_jpy_usd.top.pngClick chart to see other currency rates By Aaron Smith, staff writer


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.

That had an immediate impact on the dollar. It gained about 3% against the Japanese currency on Wednesday. That comes one day after the greenback sank to a fresh 15-year low against the yen.

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.

The yen's dramatic rise has been a major problem for Japan as many Japanese companies, such as Toyota (TM) and Sony (SNE), rely heavily on exports.

"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."  To top of page

Just the hot list include
Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Overnight Avg Rate Latest Change Last Week
30 yr fixed3.80%3.88%
15 yr fixed3.20%3.23%
5/1 ARM3.84%3.88%
30 yr refi3.82%3.93%
15 yr refi3.20%3.23%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Index Last Change % Change
Dow 29,910.37 37.90 0.13%
Nasdaq 12,205.85 111.44 0.92%
S&P 500 3,638.35 8.70 0.24%
Treasuries .84 -0.04 -4.10%
Data as of 12:30am ET
Company Price Change % Change
Ford Motor Co 8.29 0.05 0.61%
Advanced Micro Devic... 54.59 0.70 1.30%
Cisco Systems Inc 47.49 -2.44 -4.89%
General Electric Co 13.00 -0.16 -1.22%
Kraft Heinz Co 27.84 -2.20 -7.32%
Data as of 2:44pm ET

Sections

Bankrupt toy retailer tells bankruptcy court it is looking at possibly reviving the Toys 'R' Us and Babies 'R' Us brands. More

Land O'Lakes CEO Beth Ford charts her career path, from her first job to becoming the first openly gay CEO at a Fortune 500 company in an interview with CNN's Boss Files. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.