There are sound arguments for Japan sitting on the sidelines as the yen skids to a four-decade low.
Turning the currency around, never easy at the best times, has just become harder given the renewed embrace of the greenback. Prime Minister Sanae Takaichi¡¯s government certainly won¡¯t be pushing on an open door.
The most successful currency interventions contain an element of surprise and, with a bit of luck, can help shift market psychology. Renewed purchases would give the beleaguered yen a boost, but are unlikely to result in any substantive change in the way traders are thinking. The dollar looks set to enjoy a period of strength after new Federal Reserve Chairman Kevin Warsh made a forthright commitment to combating inflation. The yen will languish for at least a while longer. Tokyo has little to gain from fighting that sentiment too aggressively.
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