Japan has taken the extraordinary step of intervening in the currency market in an effort to drag down the soaring yen. Japanese monetary authorities bought dollars and sold trillions of yen, driving the yen down from 84.5 yen to the dollar to 82, the New York Times reports. Their goal: to protect Japanese exports, which have taken a beating this year as the yen hit a 15-year-high against the dollar. Japanese investors cheered, sending the Nikkei up 2.3%, according to Bloomberg.
But not everyone was a fan. “Intervention is like putting a band-aid on,” an Oksana Securities analyst tells the Wall Street Journal. It’s “not a fundamental solution.” What Japan really needs, critics argue, are major reforms to reduce its dependence on exports. The move also tells the rest of the world that it’s looking out for No. 1, says Michael Shuman of Time. If other countries follow suit, “the global economy could sink into an era of beggar-thy-neighbor policies that end up hurting everyone.” (More yen stories.)
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