Market News
Japan's yen rescue has echoes of Asian financial crisis, ex-FX diplomat says
By Leika Kihara
Japan's latest efforts to support the yen have echoes of the Asian financial crisis of the late 1990s and differ significantly from traditional coordinated currency interventions, according to former senior Japanese currency diplomat Naoyuki Shinohara.
U.S. Urges Japan to Use Dollar Swap Lines
U.S. Treasury Secretary Scott Bessent said this month that Washington had joined Tokyo's efforts to halt the yen's decline.
Bessent encouraged Japan to use dollar swap lines rather than sell U.S. Treasury securities to finance future currency-market intervention.
Shinohara said the situation reminded him of the Asian financial crisis, when access to U.S. dollar liquidity became a critical issue across the region.
During that crisis, the United States, Japan and the International Monetary Fund provided Thailand with dollar funding to strengthen its foreign-exchange reserves.
Shinohara stressed that Japan's current circumstances are very different from Thailand's position during the crisis, but said the underlying dynamic had some uncomfortable similarities.
July 31 Intervention Was Unusual
Shinohara said the joint Japan-U.S. action on July 31 to support the yen differed considerably from conventional coordinated currency intervention.
