On Sept 22, Japan's government purchased yen on the foreign-exchange market for the first time since 1998. The finance ministry was attempting to stem the yen's rapid slide, and for a while, the US$20 billion intervention seemed to be working: the yen's value rose from nearly ¥146 (755 baht) per US dollar to slightly less than ¥141. But not long after the intervention ended, the yen began to backslide. The dollar-yen rate remained below ¥146, the intervention point, for almost three weeks, before falling to ¥150 on Oct 20.
One might wonder whether this is such a bad thing. A weak currency, however, is supposed to benefit exporters -- and thus boost economic growth.
The problem is that Japanese manufacturing firms have shifted their production facilities abroad in recent decades. While yen depreciation swells the profits and dividends of foreign subsidiaries, it does not boost export volumes or domestic employment, at least not immediately.
