Book Description
This has raised concerns that Japan may intervene in currency markets for the first time since March 2004 to shore up the value of the dollar and slow the appreciation of the yen. [...] One problem with the focus on currency intervention to correct balance of trade deficits is that only about half of the increase in the value of a foreign currency is reflected in prices of imports into the United States. [...] This is raised concerns that Japan may intervene in currency markets for the first time since March 2004 to shore up the value of the dollar and slow the appreciation of the yen. [...] The intended result was to keep the value of the yen from appreciating too quickly in order to keep the price of Japanese exports from rising in markets such as those in the United States and to maintain the profitability of those exports. [...] For 2003 and 2004, despite the record size and frequency of the intervention by Japan, the authors found it difficult to statistically distinguish the pattern of exchange rate movements on intervention days from that of all the days in that particular subperiod.
