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Japan Intervenes In FX Markets... Again; Hilarity Ensues

Tyler Durden's picture


Minutes ago we saw the following headlines flash, describing Japan's latest attempt to kill the Yen, following the earlier already failed attempt by Moody's which while probably being paid well for its downgrade of Japan, did not achieve its true purpose - to weaken the Yen:

  • MOF: Will Require Banks To Report FX Trading Positions - a nice little appetized to FX capital controls...
  • Fin Min Noda: Will Set Up Maximum $100B Facility To Deal With Yen Rise - yet another attempt at central planning of FX crosses
  • MOF: Will Strengthen Monitoring Of Currency Markets - Noda will be watching... even more

What is highly entertaining, is that as Bloomberg's Michael McDonough shows, going forward we will need to measure the halflife of Japanese intervention not in days, not in hours, not even in minutes, but in actual ticks. Note: Japan wants this chart to go up.... not down.


Another amusing outcome: we now have the latest FX major: the USDJPYLOL

And for those who actually care, Bloomberg has the skinny on this latest act of utter desperation:

  • Says Japan continues to see one-sided movements in currency market and government is ready to take bold actions if necessary
  • Says traders will be required to disclose their forex positions, and this disclosure will be compulsory through September
  • Says government hasn’t decided on any action against excessive FX positions
  • Yen swings between gains and losses vs dollar, rising to as high as 76.59 after earlier falling to as low as 76.87

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Tue, 08/23/2011 - 22:57 | 1593361 mfoste1
mfoste1's picture

govt need to stay out of the markets.....

Tue, 08/23/2011 - 22:59 | 1593375 So Close
So Close's picture

Animal Spirits... meet alien invaders.  Bullish.

Wed, 08/24/2011 - 02:02 | 1594006 glenlloyd
glenlloyd's picture

they won't get out till they've killed it, and the fight will be like nothing we've seen before

Tue, 08/23/2011 - 22:58 | 1593369 slow_roast
slow_roast's picture

Stuck between a rock and a hard place.  


Sounds like a Japanese fetish video.

Tue, 08/23/2011 - 23:00 | 1593383 magpie
magpie's picture

needs more tentacles

Tue, 08/23/2011 - 23:05 | 1593411 tmosley
tmosley's picture

They're trying, but they can't shove any more in.

That is among the many incarnations of the Keynesian Endpoint.

Tue, 08/23/2011 - 23:08 | 1593429 Drag Racer
Drag Racer's picture

Stuck between cesium and strontium. 

fixed it for ya....

Tue, 08/23/2011 - 23:19 | 1593493 JLee2027
JLee2027's picture

ZH Bug......

I still can't select the PLUS (Green) or MINUS (Red) messages when they include a reply in italics. Anybody else?


Tue, 08/23/2011 - 23:25 | 1593529 SumSUN
SumSUN's picture


Tue, 08/23/2011 - 23:26 | 1593534 SumSUN
SumSUN's picture


I mean.. Yeah!

Tue, 08/23/2011 - 23:27 | 1593542 SumSUN
SumSUN's picture

I wonder how it gets stuck between the buttons...

Wed, 08/24/2011 - 03:54 | 1594160 slewie the pi-rat
slewie the pi-rat's picture

hey, JLee:   so what?

Tue, 08/23/2011 - 23:08 | 1593431 DormRoom
DormRoom's picture

Japan's economy must be hurting more than what has been reported for the BOJ to intervene so frequently.  Enter wolfpack.

Tue, 08/23/2011 - 22:58 | 1593371 LetThemEatRand
LetThemEatRand's picture

Another conspiracy theory I suppose.  Breaking from CNBC -- this is bullish for BAC, which is a cheap trade at well below book.  

Tue, 08/23/2011 - 23:07 | 1593422 lolmao500
lolmao500's picture

Well they may be right for once.

Yes, BAC is worthless... but if you factor in the corruption, then it's worth a lot more than 6$ a share...

Let's do the math :

(corruption of the FED) + (corruption in Washington DC) + (bailout mechanism) + (bend over factor of the American people) X (cost of KY) = BAC shares are worth a lot more than 6$...

Tue, 08/23/2011 - 22:58 | 1593372 Blorf
Blorf's picture

I guess they need to announce a strong Yen policy to send things the other way?

Tue, 08/23/2011 - 23:00 | 1593381 zorba THE GREEK
zorba THE GREEK's picture

Like Japan doesn't hold enough worthless fiat U.S. dollars, it has to go out and buy more.

Hey, I'll trade you my roll of Charmin for your roll of Cottonelle. 

Tue, 08/23/2011 - 23:04 | 1593406 brokesville
brokesville's picture

hey look my new honda glows in the dark

Wed, 08/24/2011 - 09:13 | 1594662 indygo55
indygo55's picture

I think the batteries will stay half-charged for 150 years too. Its a new feature.

Tue, 08/23/2011 - 23:05 | 1593407 scatterbrains
scatterbrains's picture

Are the Japs taking advantage of today's ppt pump to repatriate funds back home and buying gold with the proceeds ?

Tue, 08/23/2011 - 23:07 | 1593415 chartcruzer
chartcruzer's picture

Was talking with a older friend last night who was savvy on the markets. He's in shock with the combination of record low interest rates, stock market declines, high inflation, and rocketing PM. He simply does not know what to think/do other than stuff money under his mattress as he refuses to believe pm is money. When the broader population of investing sheeple figure out that there is no way to do anything but loose money (in real terms) using conventional investing techniques all hell is going to break loose on planet washington. With the EU and US economies having chronic fatigue syndrome the financial markets could soon resemble an epileptic seizure. going to invest 100% of the portfolios very soon - short on equities, long on PM, long on Ag, and long a few safe currencies. Time to sit back and watch the spectacle. The chart says it all......[s238082247]&disp=P

Tue, 08/23/2011 - 23:11 | 1593446 reader2010
reader2010's picture

Just tell your finanical "savvy" friend that Mark Twain once famously said, "It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so."

Tue, 08/23/2011 - 23:37 | 1593524 dwdollar
dwdollar's picture

Don't underestimate the stupidity of people.  My wife is constantly rolling baby boomers into CDs at <1%.  The very same credit union has a speciality checking account (to get people in the door) at 2.96%!  WTF?  You're going to lock your money up for 6 months when you can get over twice the interest with no strings attached?  Baby boomers are f'king retarded with money.  They don't deserve the wealth they have.  Period.

Wed, 08/24/2011 - 00:41 | 1593815 Oh regional Indian
Oh regional Indian's picture

Hope your wife isn't reading this dw, for the implications are quite clear even for the slower ones here! ;-)

On Japan, I can tell  you first hand, even now, except Fuku and locale, people (liek my old partners in Kyoto) still believe it's just a blip, a glitch, all will be well. Especially NOW, with change in leadership etc. Quite sad actually. 

Japan is really caught between the US (which is it's effective controller) and itself (since NOTHING the US has done there since WWII has been to ANY benefit of the populace at large).

Sayonara to Japan as we know it, hopefully for ever. I hope they rediscover their essence, so maligned by the ugly hand of the US controllerate.


Wed, 08/24/2011 - 04:20 | 1594189 slewie the pi-rat
slewie the pi-rat's picture

i know!  it's kinda japanese, methinks, Vi-ndianOh

i have two japanese friends, who just dont want to talk abt it

the lady i was talking with last saturday has family in or near tokyo;  one of the samurai clans;  so, i asked her how her parents were:  oh, they're fine;  no.  no problem!  they're fine

i don't know what they believe, ORI, but that is sure what they say, alright!

they'll talk about dogs, flowers, food, plants and gardens, being widowed, their kids, but not about that.  ain't gonna happen

Tue, 08/23/2011 - 23:36 | 1593587 gwar5
gwar5's picture

Send him this:  321gold: Gold and Economic Freedom by Alan Greenspan 1966


And send him this, for how it ends: Fiat Currency Failure: John Law | Rapid Trends - Gold and Silver Bullion


The last paragraphs of Greenspan's are nutshell: Here's the last two below. People don't realize what money really is, and isn't.

"In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.

This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard."

Alan Greenspan
[written in 1966]


Wed, 08/24/2011 - 07:07 | 1594353 DefiantSurf
DefiantSurf's picture

 and now the same guy goes on national tv and tells everyone "we will not default, we can print money" ?

Apparently his views changed over the years....


Tue, 08/23/2011 - 23:21 | 1593419 DormRoom
DormRoom's picture


Tue, 08/23/2011 - 23:08 | 1593428 GuyJeans
GuyJeans's picture
  • Says traders will be required to disclose their forex positions, and this disclosure will be compulsory through September


How is this helpful?  Is this so the BOJ can front run/stop out etc  Ms Watanabe?

Tue, 08/23/2011 - 23:28 | 1593548 Rick64
Rick64's picture

Yes what is their reasoning for this? It looks like a scare tactic. Crush the traders that are long the yen?

Tue, 08/23/2011 - 23:09 | 1593433 Seasmoke
Seasmoke's picture

to infinity and beYENd

Tue, 08/23/2011 - 23:10 | 1593439 hedgehogging
hedgehogging's picture

Does Mrs Watanabe need to report to MOF as well??? Tsk! Tsk!

Tue, 08/23/2011 - 23:12 | 1593449 Johnny Yuma
Johnny Yuma's picture

And pop goes the Weasel. 

Tue, 08/23/2011 - 23:12 | 1593454 Ass to Mouth
Ass to Mouth's picture

At least they got bukkake going for them.

Tue, 08/23/2011 - 23:15 | 1593458 Slin
Slin's picture

My heart goes out to the Japanese people.  These interventions are showing that you can't even die a slow death.  They push on a string until one day it will go poof.  These interventions and lack of success and terrible debt show how close they are.  Not forgetting it has never done anything for them.  It failed, but worse is the way it is ending..frightening.

Tue, 08/23/2011 - 23:19 | 1593488 hedgehogging
hedgehogging's picture

Japanese are very determined people..... I think I can, I  think I can, I  think I can......

Tue, 08/23/2011 - 23:23 | 1593514 lolmao500
lolmao500's picture

I think I can win WW2... till you nuked them.

The keynesians need to be nuked economically till they realize they can't win.

Tue, 08/23/2011 - 23:41 | 1593620 reader2010
reader2010's picture

better way to put it is they're delusional.

Tue, 08/23/2011 - 23:21 | 1593498 Reese Bobby
Reese Bobby's picture

Welcome to the "I Heart Japan Club"

-China, Korea, Philippines, Pearl Harbor...

Tue, 08/23/2011 - 23:15 | 1593462 Yen Cross
Yen Cross's picture

  Thanks for the reminder to take the 5 pip T/P off my usd/jpy trade.  Range 76- 77.20/40. 

Tue, 08/23/2011 - 23:16 | 1593471 gwar5
gwar5's picture

FED: Must. all. go. down. together.   Bernanke's going to get some nasty hemorrhoids straining this hard -- look away!


Now, here's a country that got EQ'd, tidal waved, melted down with hot plutonium, has a 200% debt to GDP and just got downgraded (!), and they cannot seem to knock it's currency down against the USD, no matter what they do, I guess because the dollar is perceived to be that much worse. What does that say about the poor Benjamins?

Speaking of conspiracies lately --- wonder what the Fed has in store for gold when it's the last safe haven?



Tue, 08/23/2011 - 23:51 | 1593663 Divine Wind
Divine Wind's picture

"wonder what the Fed has in store for gold when it's the last safe haven?"

I am of the general belief that there is not enough physical gold being held by the general public to make it worth trying to confiscate.

The piles supposedly held by the various funds...., now that is a different story.

Be that as it may, as a friend is fond of saying;

"If they come for my gold, they will only leave with lead."

Tue, 08/23/2011 - 23:16 | 1593473 chump666
chump666's picture

Asian markets are looking very broken.  Should be rallying.

Tue, 08/23/2011 - 23:17 | 1593475 Yen Cross
Yen Cross's picture

  Japan is running the { TWIST> ... Spillover>...

Tue, 08/23/2011 - 23:17 | 1593477 Reese Bobby
Reese Bobby's picture

Poor Kyle Bass...

Tue, 08/23/2011 - 23:18 | 1593483 Captain Benny
Captain Benny's picture

Oh no! My FX position will be known by more than the people that already know and monitor my trades!  Sorry, but you cannot punish FX trading.  The nature of open currencies is such that you've got to pay up with "intervention" costs if you want to make a difference.

The BOJ has a lot of currency devaluation work ahead of it if it thinks it can devalue with the big boys: USD and EUR

Tue, 08/23/2011 - 23:22 | 1593508 LoneStarHog
LoneStarHog's picture

Hey, Japanese people, round up all of those banker losers and move their office to the middle of Fukushima.

Tue, 08/23/2011 - 23:26 | 1593537 chump666
chump666's picture

Hedge Funds are crunching risk trades, hence the YEN being bid on crosses.

Rumor: outta NY on the close the BAC takeover via JPmorgan. 

Wed, 08/24/2011 - 04:35 | 1594218 Yen Cross
Yen Cross's picture

Moron ! The yen is always bid on crosses! Risk?

Tue, 08/23/2011 - 23:28 | 1593547 Nage42
Nage42's picture

People's Bank of China filling in the Japanese form for: "What is your intended position in Yen?"

Chinese trader 1: "Boss, form only have 12 blank spots for number, what I do?"

Chinese desk head: "You just put in tree retters 'Eh eru eru'  Be a man!"


Cold day in hell when China allows for a weak Yen to open the door for manufacturing capacity to repatriate back to Nippon.  Who's pulling the strings you may ask?  Who would benefit from a strong Yen? (psst: the people who get the work offshore'd and then have another lever to play with in the FX peg).

Tue, 08/23/2011 - 23:37 | 1593593 Mine Is Bigger
Mine Is Bigger's picture

Yes, I totally hear you.

Even at the current excahnge rate, some Japanese companies have already started moving their factories from China to Vietnam, Laos, Myanmmar, etc., because rising labor costs in China are squeezing their profits.

Tue, 08/23/2011 - 23:43 | 1593627 reader2010
reader2010's picture

That's bullish for China. Cause the Chinese need to build more ghost cities to get thei GDP numbers stay constant.

Tue, 08/23/2011 - 23:37 | 1593596 Sequitur
Sequitur's picture

Moodys - first came Japan. Next up, Japanese banks.

Moody's Investors Service is in final discussions on whether to downgrade Japan's biggest banks after lowering the country's sovereign debt rating today, a person with direct knowledge of the matter said. Mitsubishi UFJ Financial Group Inc., Sumitomo Mitsui Financial Group Inc. and Mizuho Financial Group Inc. are among lenders being examined for a possible rating cut, said the person, who asked not to be identified before a decision. The U.S. company said on May 31 it had begun a review of Japanese banks' credit ratings, along with the sovereign's.

Wed, 08/24/2011 - 00:17 | 1593740 Nage42
Nage42's picture

New bank Japanese bank rule:  "Disclose how much Tepco stock you are marking at last year's _nominal_ value."


Can you say insta-collapse?


You think US is marked to magic... OMG, the Japanese _invented_ split horizon reality.


Tue, 08/23/2011 - 23:41 | 1593618 zorba THE GREEK
zorba THE GREEK's picture

Breaking news: Moody's downgrades the earthquake and the hurricane. Obama blames both on Bush.

Wed, 08/24/2011 - 00:09 | 1593713 Frankie Carbone
Frankie Carbone's picture

"Says traders will be required to disclose their forex positions, and this disclosure will be compulsory through September
Says government hasn’t decided on any action against excessive FX positions"

Well then, I smell the sweet aroma of gaming this for a nice tidy profit. LMAO!!

No Japan, I will not disclose my position to you if I can help it, and....

You can put a warrant out for me here in Florida but I don't think it'll do any good.

Sweet, as soon as they trash the yen I'll short the dollar against it and be a gazzionaire in no time!

What you say? What's that? That's not what's supposed to happen? It's not in the statist central planner's playbook?

Tough fucking cookies. Two things here bro. First, being somewhat of a rational actor I'm gonna act in my best interests and if they want to misprice the yen then I'm gonna take some of that money that they pump into the FOREX and place it into my wallet, and...

I hate central planners so foiling their plan is a bonus.

Wed, 08/24/2011 - 00:17 | 1593738 BKGuy
BKGuy's picture

Well, maybe if they hadn't maintained the world's funding currency for 20 years...when the world is selling your currency for that long, eventually they will need to buy back. Can't sell into perpetuity.

Wed, 08/24/2011 - 00:39 | 1593810 DaBernank
DaBernank's picture

Officially peg to the USD and get it over with.

Wed, 08/24/2011 - 02:06 | 1594000 BigInJapan
BigInJapan's picture

Anybody have the Q2 GDP numbers for this Godforsaken pseudo-commie wasteland? Q1 #s came out 90 days after the end of Q1. Methinks we won't see the Q2#s until Kan is out at th end of the month.

Nary a peep about the Moody's downgrade, nor the GDP#s on the lamestream news over here.

But every talking head on TV says "Sell your gold!!! SELL IT NOW!"

Rudderless ship.

Nobody out there has said this to date but I'm going  to say it now. Mrs. Watanabe is THE BANK OF JAPAN.

I wonder if the new rules of disclosure will also apply to the various Japanese banks' trading desks. I highly doubt it.

By the way, gold is on sale here in Japan. I've spent 8 months buying silver and gold proof coins at 10-35% below spot.

Nobody is buying except the gaijin.

Wed, 08/24/2011 - 02:46 | 1594079 Troublehoff
Troublehoff's picture

how hard can it be to kill the value of a fiat currency?


1. print up X trillion Yen

2. monetize X% of your enourmous 200% of GDP government debt (hint - make it quite a big chunk)

the BOE did it a couple of years back, worked


...oh, and make sure you announce it as 'monetization' not QE, and that you have no intention of selling these bonds back into the market, ever

Wed, 08/24/2011 - 07:11 | 1594358 DefiantSurf
DefiantSurf's picture

so help a layman understand, how many of those "never to be seen again" bonds are sitting on the FED balance sheet?



Wed, 08/24/2011 - 03:50 | 1594156 Yen Cross
Yen Cross's picture

  Book Keeper becomes / BOSS? LMAO!@!  KAMPO...

Wed, 08/24/2011 - 04:33 | 1594213 Yen Cross
Yen Cross's picture

 MoF is such a joke! Export break even is 78. These guys have spent them selves down! No cash and no cattle!

Wed, 08/24/2011 - 07:35 | 1594388 silver is money
silver is money's picture

I am 99.999% sure that this policy wont work

Wed, 08/24/2011 - 08:25 | 1594471 Downtoolong
Downtoolong's picture

going forward we will need to measure the half-life of Japanese intervention not in days, not in hours, not even in minutes, but in actual ticks.

Still not so bad really, considering the half-life of Fed interventions is now negative.

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