I’ve had a chance to read through the Treasury’s semi-annual currency report. The Treasury takes a constructive view of the EUR/CHF peg but isn’t happy ab0ut yen intervention.
In contrast to the G-7 post-earthquake intervention in March, the United States did not support these interventions.
They note that FX volatility was lower at the moment of intervention and said that the market appeared to be operating normally and reacting to developments elsewhere (in Europe, no doubt). The Treasury has some helpful hints for Japan, and I’m sure Noda & Co. will be happy to oblidge:
Rather than reacting to domestic “strong yen” concerns by intervening to try to influence the exchange rate, Japan should take fundamental and thoroughgoing steps to increase the dynamism of the domestic economy, increase the competitiveness of Japanese firms – including those in utilities and services – and raise potential growth.
