Forex Intervention Effects Not to Last Long: Ex-BOJ Gov. Kuroda

Tokyo, May 14 (Jiji Press)–Former Bank of Japan Governor Haruhiko Kuroda has indicated that the effects of foreign exchange market interventions will not last long. At an event held in Tokyo on Wednesday, Kuroda said that the BOJ’s recent yen-buying, dollar-selling interventions “had a certain effect” in propping up the Japanese currency against the greenback. Still, he added, “It is difficult for intervention effects to last long.” “With the strength of the Japanese economy taken into consideration, the dollar would be balanced around 120-130 yen,” the former top Japanese central banker said, indicating that the yen’s current rates of slightly under 160 against the dollar are too weak for the Japanese currency. “If speculative traders suffer major losses as a result of currency interventions (by authorities) and pull the plug, the effects of the actions could be sustained,” Kuroda said. “Usually, however, the effects of interventions would hardly last for weeks or months,” he also said. Touching on the BOJ’s monetary policy steering amid the ongoing Middle East crisis, Kuroda said, “Unless the blockade of the Strait Hormuz is lifted at an early time, inflation would become severer through higher crude oil prices, possibly making it necessary for the central bank to not only accelerate its monetary policy normalization process but also tighten its grip on credit.” Kuroda served as BOJ governor for about 10 years until April 2023. END [Copyright The Jiji Press, Ltd.]