Will intervention work?

There has been much fruitless speculation over whether the Japanese authorities want the yen to fall back sharply or just want to see it stabilise. We do not believe there is any such “grand plan”. Indeed, the aim of Wednesday’s intervention may have been at least as much political as economic – to bolster domestic support for PM Kan. For what it is worth, we suspect that Tokyo would be delighted to see a sharp fall in the yen, but would settle for no further rises.