The Change Mariner

Japanese Struggle To Control Yen

New York Times:

Japanese financial authorities are waging a battle against what they see as one of the biggest threats to the nation's economic recovery - a rising yen. And while the effort seems to be working so far, analysts and investors are questioning how long they can keep it up.

After a year of steady gains against the dollar, the yen weakened to a five-month low, around 112 yen, this month from about 106 yen in early February. The change in direction for the Japanese currency was a relief to the country's exporters whose profits are crimped by too much yen strength.

But the cost was steep: Tokyo spent record amounts to hold its currency back by selling yen and buying dollars. Japan sold 10.5 trillion yen ($95.2 billion) in the two months ended Feb. 26, already more than half last year's 20 trillion yen, a record. Through such transactions, Japan has accumulated the largest foreign-currency reserves in the world, at $777 billion, much of it invested in United States government debt. Japanese investors accounted for about half the purchases of United States Treasury securities last year.

Despite the heavy intervention, the Japanese currency is again inching up on the dollar, rising to around 109 yen on Tuesday from around 111 on Friday...