TOKYO — Japan and the United States reaffirmed their commitment Tuesday to free and orderly currency markets, clarifying that currencies should be freely determined by buyers and sellers unless those buyers and sellers determine something governments find disorderly.
Japanese Finance Minister Satsuki Katayama said Tokyo and Washington remain aligned on ensuring “orderly” foreign-exchange movements following their coordinated intervention to support the yen.
Japan recently spent roughly $99 billion buying yen and selling dollars in its largest-ever monthly currency intervention, an unusually expensive demonstration of confidence in letting markets work things out for themselves.
Officials stressed that intervention does not undermine free markets because intervention is only used when free markets produce prices requiring intervention.
Under the arrangement, millions of investors may independently buy and sell currencies, analyze interest rates, inflation and capital flows, and collectively discover the correct exchange rate.
Finance ministries then check their work.
Economists said the system combines the efficiency of market pricing with the stability of bureaucrats putting both thumbs on the scale whenever the answer becomes inconvenient.
The yen remains freely traded around the clock.
Its freedom, officials noted, will continue to be closely supervised.
Inspired by:
