Bank of Japan yen intervention: A short history

Explainer The yen’s rollercoaster ride The Bank of Japan’s interest rate rise last week rattled markets, triggering an unwinding of yen-funded carry trades. Here’s a look at how the BOJ has shaped the yen’s value over time. The Japanese yen has been under pressure in the past few years as markets focused on the wide U.S.-Japan interest rate differentials. The yen lost more than 20% against the dollar since the outset of 2022, prompting several rounds of intervention by Tokyo to prop up the currency in September and October that year. It kept falling despite further intervention in April and May 2024, touching a 38-year low of 161.96 to the dollar on July 3. Japan is suspected to have stepped in again in mid-July to put a floor under the yen. The yen’s downtrend has reversed in recent days, following the Bank of Japan’s July 31 decision to raise interest rates and ahead of an expected loosening of U.S. monetary policy. The BOJ’s hawkish move, along with investors’ concerns about U.S. growth, jolted global stock and bond markets. It triggered an unwinding of the carry trade, whereby investors borrow cheaply in yen to invest in higher-yielding assets. The yen rebounded