So I’m pretty new to the forex world, just was noticing the hard spike in the dollar/yen pair. People are saying the Bank of Japan might be intervening to defend the yen. But if the yen is getting stronger against dollar isn’t that good, for them? Basically why would they not want to let it get stronger against the dollar?
Not really. The Japanese don’t want the yen to rise too much because that will make their exports relatively more expensive i.e., Americans would need more dollars to buy Japanese products.
Yen strength won’t necessarily make their exports expensive, unless exporters raise prices bc of it.
Japan is huge on exports. If you were a large auto manufacturer in Japan and every month you recieved the same US$ or Euros, you’d be making less and less money over time. Intervention helps weaken the Yen so other currencies are more valuable. Other currencies is what you would receive from your exported goods.