The man behind Japan’s $170 billion effort to support the yen
For many years, Masato Kanda could hardly sleep.
“Three hours a night is excessive,” he laughed, speaking to the BBC from Tokyo.
“I slept three hours straight before I was woken up but then I went back to sleep, so if you add them up, I have a little more.”
So why is this 59-year-old official’s work schedule so harsh?
Until the end of July, he was Japan’s deputy finance minister for international affairs, the country’s top currency diplomat, or Yen Czar.
Key to the role is combating currency market speculators who could cause chaos in one of the world’s largest economies.
Historically, authorities have intervened to weaken the value of the Japanese currency. A weak yen benefits exporters like Toyota and Sony because it makes goods cheaper for overseas buyers.
But when The yen fell sharply During Mr. Kanda’s time in office, the cost of importing essential goods such as food and fuel has increased, causing a cost of living crisis in a country more accustomed to falling prices than rising prices. .
During his three years in this role, the value of the yen against the US dollar weakened by more than 45%.
To control the yen’s slide, Mr. Kanda has unleashed about 25 trillion yen ($173 billion) to support the currency, marking Japan’s first intervention in nearly a quarter of a century.
“The Bank of Japan and the Ministry of Finance are very clear,” said economist Jesper Koll. They intervene not at a specific level of currency, but they intervene when the market fluctuates too much.”
Japan is currently on the US Treasury Department’s watch list of currency manipulators.
But Mr. Kanda argued that what he did was not market manipulation.
“Markets will move based on fundamentals but sometimes they move too much due to speculation and they don’t reflect fundamentals that don’t change overnight,” he said.
“When it affects the average consumer having to buy food or fuel, that’s when we intervene.”
While countries like the US and UK can raise interest rates to boost the value of their currencies, Japan has for years been unable to raise borrowing costs due to its weak economy.
Professor Seijiro Takeshita of Shizuoka University said Japan has no choice but to intervene in the currency market.
“It’s not the right thing, but in my opinion it’s the only thing they can do.”
The irony is that the value of the yen has skyrocketed in recent months without Mr. Kanda or his successor having done anything. The Bank of Japan surprised the market by raising interest ratesAnd The country has a new prime minister.
So is the $170 billion effort to support the yen a waste of money?
No, Mr. Kanda said, pointing out that his interventions actually turned a profit, although he emphasized that that was never the goal.
As for whether his actions were ultimately successful, he said: “I cannot judge, but many say that our exchange management has prevented excessive levels of speculation. ”
The market or historians should be the final judge, he added.
After decades of economic stagnation, Mr. Kanda also made optimistic comments about Japan’s prospects.
“We are finally seeing investment and wages rising, and we have a chance to return to a normal market economy,” he said.
A more surprising legacy for this “humble civil servant” is that he became an internet star after Japanese social media users praised his ability to surprise financial markets with a series of AI-generated dance videos.
