The man behind Japan’s $170bn bid to prop up the yen | EUROtoday

For a number of years, Masato Kanda hardly slept.

“Three hours a night is an exaggeration,” he laughs as he speaks to the BBC from Tokyo.

“I slept for three hours consecutively before being woken up but I then went back to bed, so if you add them up, I got a bit more.”

So why was this 59 year-old bureaucrat’s schedule so punishing?

Until the top of July, he was Japan’s vice finance minister for worldwide affairs, the nation’s high foreign money diplomat, or yen czar.

Key to the position was heading off foreign money market speculators who may set off turmoil in one of many world’s largest economies.

Historically, authorities intervened to weaken the worth of the Japanese foreign money. A weak yen is sweet for exporters like Toyota and Sony because it makes items cheaper for abroad patrons.

But when the yen plummeted throughout Mr Kanda’s time in workplace it elevated the price of importing important objects like meals and gasoline, inflicting a price of dwelling disaster in a rustic extra used to seeing costs fall fairly than rise.

In his three years within the position, the worth of the yen towards the US greenback weakened by greater than 45%.

To management the yen’s slide, Mr Kanda unleashed an estimated 25 trillion yen ($173bn) to assist the foreign money, marking Japan’s first such intervention in nearly 1 / 4 of a century.

“The Bank of Japan and the Ministry of Finance are very clear. They intervene not at a particular level of the currency, but they intervene when market volatility is too much,” says economist Jesper Koll.

Japan now finds itself on the US Treasury’s watchlist of potential foreign money manipulators.

But Mr Kanda argues that what he did was not market manipulation.

“Markets should move based on fundamentals but occasionally they fluctuate excessively because of speculation, and they don’t reflect fundamentals which don’t change overnight,” he says.

“When it affects ordinary consumers who have to buy food or fuel, that is when we intervened.”

While nations just like the US and UK can elevate rates of interest to spice up the worth of their currencies, Japan had for years been unable to place up the price of borrowing because of the weak spot of its financial system.

Professor Seijiro Takeshita of the University of Shizuoka says Japan had no different possibility apart from to intervene within the foreign money markets.

“It is not the right thing to do, but in my opinion it is the only thing they can do.”

The irony is that the yen’s worth jumped in current months with out Mr Kanda or his successor lifting a finger after the Bank of Japan stunned the markets with a fee hikeand the nation obtained a brand new prime minister.

So was the $170bn bid to prop up the yen a waste of cash?

No, says Mr Kanda and factors out that his interventions really made a revenue though he emphasises that it was by no means a purpose.

On whether or not or not his actions have been in the end profitable he says: “It is not up to me to evaluate, but many say our exchange management stopped the excessive level of speculation.”

Markets or historians ought to be the ultimate judges, he provides.

After many years of financial stagnation, Mr Kanda additionally sounds an optimistic word about Japan’s prospects.

“We are finally seeing investments and wages rising, and we have a chance to go back to a normal market economy,” he says.

A extra shocking legacy for this “humble public servant” is him turning into a star on the web after Japanese social media customers celebrated his capacity to shock monetary markets with a collection of AI generated dancing movies.