BoJ LLC: The Problems With FX Intervention
Macro Man submits:
As regular readers will know, Team Macro Man detests currency piss-taking, especially from the likes of Voldemort and the dark side of the force. However on certain occasions they agree it is useful as a policy tool, but only when the conditions are right. The $200 billion Swiss hedge fund run by ex-Moore trader Philipp Hildebrand screwed up on this front, because the man himself forgot that there are circumstances under which intervention is successful, and if you forget them, no matter how big your ego is, you will lose. And that is why he is sat on $7 billion (or thereabouts) of FX losses… maybe he should’ve done a stint at SAFE instead of Moore Capital.
But let’s get to the point of this piece. There has been a lot of noise and jaw-boning about Japan intervening in the yen, with a very rare joint BoJ/Government statement about the risk it poses to Japan’s economy, and the political debate around this appears to have reached a consensus that verbal intervention is no longer proving an effective deterrent against yen strength.
