On the graph of our left, we show the interventions of the Bank of Japan. From the late 80´s, Japan wanted to keep its currency in a quite wide band from 140 USDJPY to 90. It´s important to remark that the BoJ just cares for the US dollar, so when it intervenes it only does it on USD. The rest of the currencies usually follow the intervention.At the end of 1999, the BoJ wanted to narrow the fluctuation (red lines). During one month in 2003 it used more than 7 thousand billions JPY, which is a historical record ever. However it couldn´t keep for very long and the yen started to go up (down in the chart because it shows USDJPY) as we could see know (green arrow).
Everyone is expecting a strong intervention from the BoJ: these are the levels it used before. Surely it makes sense, but this is face. We will see in a few days when we talk about tails.
10/03/2010
