aDepartment of Economics, WHU Koblenz, Burgplatz 2, 56179 Vallendar, Germany;bKiel Institute for World Economics, Duesternbrooker Weg 120, 24105 Kiel, Germany;cInstitute for Development Strategies, Indiana University, Bloomington, USA
Abstract:
This paper uses recently released official data on the foreign exchange market interventions of the Japanese monetary authorities in the yen/U.S. dollar market during the period 1991–2001 to examine the motivation for the intervention policy. We also compare the Japanese intervention policy with the U.S. intervention policy. Our results suggest that the Japanese authorities regularly responded to deviations of the yen/U.S. dollar exchange rate from a short-term and a long-term exchange rate target. By contrast, the U.S. authorities intervened only occasionally and seemed to have merely reinforced Japanese interventions.