Japan will struggle to rescue its plummeting currency

The yen is on a wild ride. As Asian markets opened on April 29th, the currency plunged to a 34-year low of 160 to the dollar, adding to a hefty fall over the past three years (see chart). A sudden reversal to more like 155 to the dollar prompted rumours of intervention by the Bank of Japan (BoJ).

Confirmation will come with a delay, but preliminary data, based on the balances financial institutions hold at the central bank, suggest the BoJ may have spent over $30bn to strengthen the exchange rate. After subsequently weakening, the yen surged again on May 1st, raising more eyebrows among currency traders.